India cuts windfall tax on petroleum crude

The Indian government will cut the windfall tax or special additional excise duty on petroleum crude to Rs 6,700 per metric ton from Rs 7,100, according to a government notification issued on Friday. The new levies will be effective from 02, September. The government raised the windfall tax on export of diesel to Rs 6 per litre from Rs 5.50, the notification said.

The duty on jet fuel or ATF will be doubled to Rs 4 per litre effective Saturday, from Rs 2 per litre currently, according to a finance ministry notification.

The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks. India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies.


The government levies tax on windfall profits made by oil producers on any price they get above a threshold of $75 per barrel. The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost.

The Indian government's collection from the special additional excise duty imposed on the production of crude oil and the export of petroleum products from July 1, 2022, is estimated at around Rs 40,000 crores in FY2023.

In May this year, the Indian government had cut windfall tax on petroleum crude to zero before reimposing it again as global crude prices edged higher. Currently, gold crude prices are trading above $88 a barrel.

Global oil prices on Friday rose to their highest in over half a year amid supply cuts by Organization of the Petroleum Exporting Countries (OPEC) and allies, known collectively as OPEC+.

Saudi Arabia is widely expected to extend a voluntary 1 million barrel per day oil production cut into October while Russia, the world's second-largest oil exporter, has already agreed with OPEC+ partners to cut oil exports next month, Deputy Prime Minister Alexander Novak said on Thursday. (With Agency Inputs)