After Government Raises Export Tax on Petrol and Diesel, Shares of RIL and ONGC Plunge

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After Government Raises Export Tax on Petrol and Diesel, Shares of RIL and ONGC Plunge
01 Jul 2022
6 min read

News Synopsis

Friday's announcement by the government saw an increase in taxes for exports of petrol, diesel and Aviation Turbine Fuel (ATF). The centre also required exporters to comply with the domestic market's requirements first. Exports of petrol and ATF have been subject to a Rs.6 per-liter tax and diesel exports are subject to a Rs.13 per-liter tax.

The government also announced taxes on windfall profits made by crude oil producers. A separate government notification revealed that the government added a Rs.23230 per tonne tax to domestically produced crude oil in order to remove windfall gains from high international oil prices.

After the announcement of an increase in export tax, shares of Reliance Industries Ltd. (RIL) and Oil and Natural Gas Corporations (ONGC), saw a sharp decline. RIL shares fell more than 5% in the 18 months since its peak. ONGC shares plunged 10% in Friday’s early deals. BSE Sensex was almost 1% lower.

"Reliance is witnessing a sharp fall after the Government has levied taxes on windfall gains made by domestic refineries. Earlier Reliance was firing on all cylinders but now there is a break in its refinery business as the commodity cycle is also reversing however other verticals have strong growth potential," said Santosh Meena Head of Research, Swastika Investmart Ltd. The fuels produced by the RIL's Jamnagar refinery, headed by Mukesh Ambani, are exported to many countries around the globe.Friday's announcement by the government saw an increase in taxes for exports of petrol, diesel and Aviation Turbine Fuel (ATF) The centre also required exporters to comply with the domestic market's requirements first.