Indian government revised windfall tax on Crude

The government has once again revised the newly-introduced windfall tax levied on crude, diesel and jet fuel (ATF).

The tax on domestically produced crude oil has been raised to ₹17,750 ($226.14) per tonne from ₹17,000 per tonne, while export taxes on jet fuel has been cut to zero from ₹4 per litre.

The excise duty on export of diesel has been reduced to ₹5 per litre from ₹11 per litre earlier. The excise duty on export of petrol continues to be nil. The new changes will come to effect immediately.

The crude oil prices have skyrocketed following Russia’s invasion of Ukraine and the India’s oil companies recorded more than normal profits as a result of this.

India imposed the taxes on 1 July, joining a growing number of countries placing windfall levies to tap energy companies’ booming profits. However, international fuel prices have cooled since then, eroding profit margins at both oil producers and refiners.

While introducing the new levies, India had said that it will review exports and imports of these items every fortnight to amend its decision.

A windfall tax is a one-off tax imposed by the Central Government on a firm. When the company gains from something that they are not responsible for, the financial profit that ensues is called windfall profits.