The Ministry of Finance, vide notification no. No. 38/2023-Central Excise and 39/2023-Central Excise issued on 16th November 2023 has notified the reduction in the windfall tax of crude and diesel.
This tax, previously instituted as the Special Additional Excise Duty (SAED) on crude oil, has now been lowered from ₹9,800 per tonne to ₹6,300 per tonne. Concurrently, the government has also opted to reduce the SAED on diesel exports, bringing it down from ₹2 per litre to Re 1 per litre. This strategic move reflects the government’s responsiveness to the dynamic global oil market conditions and aims to balance the economic impact on both producers and consumers.
It’s worth noting that India had initially introduced windfall profit taxes on July 1 of the preceding year, aligning with the global trend of taxing supernormal profits of energy companies. In the initial implementation phase, export duties of ₹6 per litre (USD 12 per barrel) were levied on both petrol and aviation turbine fuel (ATF), along with ₹13 per litre (USD 26 per barrel) on diesel. The current reduction in windfall profit taxes demonstrates the government’s commitment to adapting its fiscal policies to the changing economic landscape while considering the welfare of both industry stakeholders and the general public.
In April, the tax on diesel was removed, only to be reintroduced in August. Likewise, the duty on Aviation Turbine Fuel (ATF) was reduced to zero in March but was reinstated in the latter part of August. However, according to PTI, the export tax on petrol was eliminated in the initial review.
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