The Central Government, vide notification no. 10/2024-Central Excise dated 15th March 2024 has raised the windfall tax on petroleum crude from Rs. 4,600 per tonne to Rs. 4,900 per tonne. The new rate shall come into force from 16th March 2024.
On July 1, 2022, India introduced windfall profit taxes, aligning itself with several other countries that levy taxes on exceptionally high profits earned by energy companies.
This adjustment follows a series of recent modifications made by the government. On February 3, 2024, the windfall tax on petroleum crude was increased to ₹3,200 per tonne.
The windfall tax is directed at unanticipated or excessive profits, often imposed on particular sectors experiencing substantial gains. Its objective is to capture the surplus earnings generated by companies as a result of unforeseen market circumstances.
The rise in windfall tax has the potential to raise production expenses for crude oil producers, potentially influencing their profitability. If oil companies decide to pass on the tax burden to consumers, it could lead to increased prices for petroleum products, thereby adding to inflationary pressures and impacting consumer spending patterns.
On the other hand, the government stands poised to acquire extra income from the increased windfall tax, which could be directed towards public initiatives, services, or mitigating fiscal shortfalls.
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