India slashes windfall tax on crude oil

The windfall tax on crude oil was reduced by the central government on Wednesday from Rs 23,250 per tonne to Rs 17,000 per tonne. This action is being taken as the price of crude oil has recently fallen globally.

The Center had on July 1 imposed a cess of Rs 23,250 per tonne on crude oil, taking into account windfall gains being accumulated by the domestic crude producers due to rising global crude prices in recent months. Domestic crude producers sell their product to domestic refineries for prices that are competitive internationally.

Windfall tax is a tax imposed on an unanticipated or unexpectedly large profit. According to a government notification, the new rates will take effect starting today, or Wednesday. In addition, the recently enacted special additional excise duty on diesel for exports has been decreased to Rs 10 from Rs 13.

The export tax on gasoline has been eliminated. The export tax on gasoline of Rs 6 per litre was implemented on July 1. As exports became increasingly lucrative, it was observed that certain In the domestic market, refiners were drying out their pumps, according to an official statement at the time.

"While crude prices have increased sharply in recent months, the prices of HSD and Petrol have shown a sharper increase. The refiners export these products at globally prevailing prices, which are very high," the government had explained the rationale behind the export tax move.