Windfall profits tax on oil has been reduced to Rs 1,900 per tonne, down from Rs 2,100 per tonne previously. Export taxes on fuels have also been reduced.
In addition, the government cut the export tariff on ATF from Rs 4.5 to Rs 3.5 per litre.
The government has reduced the windfall tax on domestically produced crude oil and aviation turbine fuel (ATF) and diesel exports. According to a government statement dated January 16, the windfall tax on crude has been decreased from Rs 2,100 per tonne to Rs 1,900 per tonne. In addition, the government cut the export tariff on ATF from Rs 4.5 to Rs 3.5 per litre. Diesel export tax has been cut from Rs 6.5 per litre to Rs 5 per litre, starting Tuesday. The special supplementary excise charge on gasoline is fixed at zero.
Windfall tax is an unique supplementary excise charge assessed to absorb the super-profits obtained by domestic crude oil producers as a result of high global crude oil product prices. India, the world’s largest user and importer of oil, has been purchasing Russian crude barrels at far lower prices than the $60 price ceiling agreed upon by the West. In July of last year, the Indian government imposed the capital gain tax on crude oil producers, as well as levies on gasoline, diesel, as well as aviation fuel exports, after private refiners sought overseas markets to advantage from robust crude inventories, rather than selling at reduced rates in India.
The government introduced these tariffs in order to tax the abnormal profits produced by domestic crude petroleum companies when worldwide oil prices surged to more over $100 per barrel. Special extra excise charges of Rs 13 per litre on diesel exports and Rs 6 per litre on petrol and aviation turbine fuel exports were imposed. In addition, the government levied an extra excise levy of Rs 23,250 per tonne on local crude oil output. There is no windfall tax on exports from special economic zones. Since then, the levies have been reassessed every two weeks and have been reduced in recent weeks as crude oil prices have fallen. The taxes’ rates are changing in response to crude oil prices.
It is worth noting that India’s energy imports increased in the nine months ending December as local demand remained high despite the global energy crisis. In April-December, India imported $163.91 billion in petroleum, crude, and associated products, an increase of about 46% year on year. Russia was India’s fourth largest importer, with imports increasing 399.73% year on year from April to December 2022. Imports from Russia increased from $6.58 billion in April to December 2021 to $32.88 billion in 2022, most likely due to oil. India increased its imports of crude oil from Russia since the latter offered lower prices. India has saved millions of crores of rupees by purchasing cheaper Russian crude oil.