On September 18, 2024, the Indian Government officially abolished the windfall tax on Petroleum Crude, Diesel, and Aviation Turbine Fuel (ATF), as announced in a recent notification.
The Special Additional Excise Duty (SAED) on these commodities is now set to zero. The SAED is a tax imposed on the supernormal profits of energy companies and is adjusted based on average oil prices over a two-week period.
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Prior to this revision, the windfall tax on crude petroleum was set at ₹1,850 per tonne, following the last adjustment effective August 31, 2024. This tax was part of a broader strategy employed by the government to manage fluctuations in global oil prices and to capture a portion of the unexpected profits made by oil producers during periods of high prices.
The removal of the windfall tax means that the SAED on the export of diesel, petrol, and ATF will continue to remain at ‘nil.’ This change is expected to impact the oil market, reducing the costs associated with these fuels and offering some relief to both consumers and businesses that rely heavily on petroleum products.
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Windfall tax was first introduced in July 2022, aimed primarily at crude oil producers. Later, it was expanded to include gasoline, diesel, and ATF exports. The policy’s main objective was to curb the tendency of private refiners to export fuels to foreign markets where prices were higher, thus ensuring that domestic supply would meet national demand.
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