Windfall Tax on Crude Oil, Fuel Exports Removed by Central Government
The government has officially removed excise duties tied to the windfall tax on crude oil and fuel exports, effective immediately
Windfall Tax on Crude Oil – Tax on Crude Oil updates 2024 – Windfall tax on crude oil removed – taxscan
Windfall Tax on Crude Oil – Tax on Crude Oil updates 2024 – Windfall tax on crude oil removed – taxscan
The Central Government has removed the windfall profit tax on crude oil produced in India and on exports of petrol, diesel, and aviation turbine fuel ( ATF ). The official notification, published on December 2, 2024, cancels several earlier tax rules to give relief to the energy sector. Union Minister of State for Finance, Pankaj Chaudhary, announced the decision in Parliament stating that it will take effect immediately.
The windfall tax was first introduced in July 2022 to tax the extra profits oil companies made when global crude oil prices were very high due to the Russia-Ukraine war. The tax rates were reviewed every 15 days to match changes in global prices. Now, with crude oil prices lower and more stable, the government decided the tax was no longer necessary.
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The notification no. 29/2024-Central Excise dated December 2, 2024, was issued by the Ministry of Finance under the powers granted by the Finance Act of 2002 and the Central Excise Act of 1944. It revokes six key notifications from June 30, 2022, that imposed excise duties on crude oil and fuels. These included:
- Notification 03/2022, published as G.S.R. 491(E).
- Notification 04/2022, published as G.S.R. 492(E).
- Notification 05/2022, published as G.S.R. 493(E).
- Notification 06/2022, published as G.S.R. 494(E).
- Notification 07/2022, published as G.S.R. 495(E).
- Notification 09/2022, published as G.S.R. 497(E).
A separate notification no. 30/2024-Central Excise dated December 2, 2024, repealed further excise duties introduced under the Finance Act of 2018. The Road and Infrastructure Cess ( RIC ) on petrol and diesel exports has been removed reducing costs for the oil industry.
This includes:
- Notification 10/2022, published as G.S.R. 498(E).
- Notification 11/2022, published as G.S.R. 499(E).
This decision is to benefit major oil companies such as ONGC, Reliance Industries, and Nayara Energy by improving their profit margins and encouraging more investment. A report by SBI Research says the move will bring much-needed relief to the industry.
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India’s diesel consumption has also been rising, reaching 8.16 million tonnes in November 2024, an 8% increase compared to the previous year. This marks the highest diesel usage since May 2024, according to the Petroleum Planning & Analysis Cell ( PPAC ).
Experts have praised the government’s decision as a practical response to the current state of the global oil market. Removing the windfall tax is seen as a way to support the energy sector while balancing government revenue needs.
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