Windfall Tax: The Central Government has made a big cut in the windfall tax on crude oil. From today, windfall tax on crude petroleum oil has been reduced to Rs 5000 per tonne. Last month, till November 30, 2023, the windfall tax on crude petroleum oil was Rs 6300, which means today there has been a reduction of Rs 1300 per tonne.

The government had also reduced the windfall tax in the last review meeting in November.
Earlier on November 16, the Central Government had reduced the windfall tax on crude petroleum oil from Rs 9800 per tonne to Rs 6300 per tonne. That means a full deduction of Rs 3500 per tonne was made in it.

Earlier on October 31, windfall tax was increased

On October 31, the Central Government had increased the windfall tax on export of petroleum crude from Rs 9050 per tonne to Rs 9800 per tonne. Today, a change has been seen in the prices of ATF and a change has also been seen in the tax rates on it.

What is windfall tax?

The central government decides the rates of windfall tax and export tax on the export of crude oil in the country and for this a review meeting is held every 15 days. Seeing the trend of crude oil prices in the last two weeks, the Government of India changes the rates of windfall tax on crude oil in the country.

Windfall tax on petrol, diesel and ATF

The central government had started the process of changing the windfall tax on petrol, diesel and aviation turbine fuel every 15 days from July 2022. The government reviews and changes the windfall tax on oil based on fluctuations in global prices.

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According to an official notification, the tax levied as Special Additional Excise Duty ( Windfall Tax ) on domestic crude oil production has been reduced from Rs 9,800 per tonne to Rs 6,300 per tonne.

SAED on export of diesel was reduced from Rs 2 per liter to Rs 1 per litre. At the same time, this duty on export of jet fuel i.e. ATF and petrol will remain zero. The new tax rates came into effect from Thursday.

Windfall tax was amended on 1 November

The windfall profit tax has been amended on the first date of November i.e. 1st November 2023. On November 1, the government had increased the tax on crude oil from Rs 9,050 per tonne to Rs 9,800 per tonne. Along with this, the levy on export of diesel was halved to Rs 2 and the levy on jet fuel was reduced from Rs 1 per liter to zero.

International oil prices have softened since the last revision. After this the government has decided to cut. The average price of the basket of crude oil imported by India stood at US$ 84.78 per barrel this month, compared to US$ 90.08 per barrel in October and US$ 93.54 per barrel in September.

India first imposed windfall gains tax on July 1 last year. It joins a growing number of countries that tax energy companies’ extraordinary profits. At that time, export duty of Rs 6 per liter (US$12 per barrel) was imposed on petrol and ATF and Rs 13 per liter (US$26 per barrel) on diesel.

A windfall profit tax of Rs 23,250 per tonne (US$40 per barrel) was also imposed on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC). The tax rates are reviewed every 15 days based on the average oil prices over the last two weeks.

A windfall tax is imposed on domestic crude if global benchmark rates rise above US$75 a barrel. At the same time, when the export margin of diesel, ATF and petrol goes above US $ 20 per barrel, then a levy is imposed on it.

Let us tell you that it is the difference between crude oil (raw material) and finished petroleum product margin.

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The government has made changes in the windfall tax. The Narendra Modi government at the Center has changed the windfall tax on domestic crude oil production to simplify the tax system and attract investors. The revised tax is now Rs 6,400 per tonne. Let me tell you, the windfall tax is imposed by the government on any industry when they start earning more profits than expected.

The government has increased the Special Additional Excise Duty (SAED) on crude petroleum to Rs 6,400 per tonne. Earlier it was zero. However, the new hike announced by the government will not affect petroleum and aviation turbine fuel. As in the past, the Special Additional Excise Duty will remain zero.

Apart from this, the government has also decided to reduce the export duty on diesel. According to the new order of the Central Government, SAED on diesel has been reduced by Rs 0.50 per liter to zero now. This decision of the government will have a direct impact on oil producing companies.

Due to the change in windfall tax, oil companies will have to pay more tax on domestically produced crude oil. However, only the manufacturing sector will get the benefit of reduction in export duty on diesel. Let me tell you, last year the government imposed windfall tax for the first time during the war between Russia and Ukraine. The government changes the windfall tax every two weeks.

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Earlier on March 20, windfall tax was cut by Rs 900 per tonne from the Centre. With this, it was reduced from Rs 4,400 per tonne to Rs 3,500 per tonne. The effect of the steps taken by the government can be seen on the price of petrol and diesel. Earlier, the government had increased the export duty on diesel from Rs 0.50 per liter to Rs 1 per litre.

Let us tell you that the government had imposed windfall tax in the month of July 2022. The cut on crude oil will be effective from Tuesday.

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The Central Government has cut windfall tax or windfall tax on diesel and ATF (jet fuel) last night in view of the softening of the prices of petroleum products in the international market. However, the duty on domestically produced crude oil (crude oil) has been increased. In the notification issued by the government last night, new rates of windfall tax on crude, diesel and ATF have been given. This new order has come into effect from today i.e. Wednesday, August 3.

Know how much tax on diesel, ATF and petrol
According to an official notification, the tax on export of diesel has been reduced from Rs 11 to Rs 5 per liter, while on ATF or jet fuel, where tax of Rs 4 per liter was now being imposed. It has been decided to end it. Similarly, zero tax on export of petrol will continue.

Increased tax on crude oil
According to the notification, the tax on domestically produced crude oil has been increased from Rs 17,000 per tonne to Rs 17,750 per tonne. While the refinery companies have got relief due to the decision taken yesterday, there has also been a setback. In this way, this decision can prove to be mixed for them. This move could impact oil producers like ONGC and Vedanta Ltd.

This tax was imposed for
the first time on July 1, India had imposed unexpected tax benefits on July 1 for the first time. With this, he joined the countries that tax the profits of energy companies. However, since then, oil prices in the international market have started falling, resulting in a reduction in profits for both oil producers and refineries.

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In view of the recent fall in international crude oil prices, the government has reduced windfall tax on export of diesel and aviation fuel by Rs 2 per liter, while on export of petrol by Rs 6 per liter. The levy has been completely abolished. Along with this, the tax on the export of domestic crude has been reduced by 27 percent to Rs 17,000 per tonne. After the government’s imposition of widow tax and now removing this tax, this tax is in a lot of discussion. Let us know what is windfall tax and why does the government impose it?

What is windfall tax?

Windfall tax is levied on such companies or industries, which make immediate substantial gains in certain circumstances. Indian oil companies are a good example of this. International crude oil prices rose after Russia’s attack on Ukraine. Oil companies got a lot of benefit from this. Oil companies were reaping huge profits due to the Russo-Ukraine war, so windfall tax was imposed on them. Not only India, Italy and UK also imposed this tax on their energy companies.

Who will benefit from the removal of windfall tax?

Reliance Industries, Oil India and Vedanta Limited will benefit from the windfall tax cut. Apart from these, Russia’s Rosnfeet Baked Naira Energy will also benefit, which operates a 20 million tonne annual refinery in Gujarat. Experts say that Reliance Industries will benefit the most. The company has two oil refineries in Gujarat. One of these is used only for export.

With the imposition of windfall tax on July 1, the cess on domestic crude oil increased to Rs 23,250 per tonne. The effect of increasing the cess was on the margins of the companies. Now by cutting windfall tax, the government has brought down the cess of Rs 23,250 per tonne on companies to Rs 17,000 per tonne, after which the margins of the companies have increased.

Impact on the exchequer

The government was expected to get Rs 69,000 crore annually from crude oil producers like Oil and Natural Gas Corporation, Oil India Limited and Vedanta due to increase in windfall tax. Had the windfall tax remained in place till March 31, 2023, the government would have received about Rs 52,000 crore in the remaining nine months of the current financial year. Now the way the government has reduced its tax and cess, it will have a great impact on the government’s earnings.

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