The Centre reduced the windfall tax on crude oil producers and exempted petrol, gasoline, and jet fuel from an export duty on Wednesday, which is likely to result in a price drop that would bring some relief to consumers. The tax reduction was revealed just weeks after the government introduced the two charges, in response to a drop in international rates.
The modifications go into effect today. The ruling is expected to benefit companies such as Reliance Industries, Oil and Natural Gas Corp, and Oil India Ltd.
The government decreased the windfall tax on diesel and aviation turbine fuel (ATF) by two cents per litre and eliminated the six-cent levy on petrol exports. According to finance ministry announcements, the tax on ATF has been reduced from Rs6 to Rs4 per litre, and the tax on diesel has been reduced from Rs13 to Rs11.
Furthermore, the additional tax on locally produced crude oil has been reduced from Rs23,250 to Rs17,000 per tonne.
India levied the taxes on July 1, joining a growing list of countries using windfall charges to tap into the increasing earnings of energy companies. As international fuel prices fell, profit margins at oil producers and refiners began to shrink.
Since mid-June, international petroleum prices have been falling due to fears of a worldwide recession, wiping any gains made during Russia’s invasion of Ukraine. Returns on processing gasoline and diesel in Asia have fallen in recent weeks, with industry consultant FGE forecasting a further drop in margins this quarter due to higher supplies.
