The Indian Government has announced the removal of windfall tax on crude oil production at a Nil rate effective from Tuesday from the former rate of 3,500 rupees ($42.56) per tonne.
On July 1 2022, India imposed the windfall tax on crude oil producers and levies on exports of gasoline, diesel, and aviation fuel.The windfall profit taxes on the export of petrol and aviation turbine fuel (ATF) was at a rate of ₹6 per litre, and on diesel at a rate of ₹13 per litre. In addition, a windfall profit tax of Rs 23,250 per tonne was imposed on domestic crude production.
As per the latest notification, the windfall tax on diesel has been slashed to Rs 0.5 per litre from Re 1 per litre earlier. There is no windfall tax on petroleum and ATF.
Windfall tax is a higher tax which was levied by the government on specific industries when they experience unexpected and above-average profits. Whena sudden rise in an industry’s revenue, the Government imposes this tax.The recent Russia-Ukraine war benefitted oil and gas industries with a sudden rise in their profit which made the Government impose a windfall tax on these industries.
The government took this crucial decision at a time when OPEC+ decided to cut production. The move led to Brent rising by almost 6 per cent to USD 84.58 per barrel on Monday.
The government also slashed the tax on diesel exports to 50 paise per litre and the levies on the export of aviation turbine fuel (ATF) and petrol continued to be nil.
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