Windfall tax on domestic crude, fuel exports scrapped after 30 months
India has scrapped the windfall profit tax on domestically-produced crude oil and exported jet fuel, diesel, and petrol, due to declining international oil prices. The tax, in place since July 2022, collected ₹44,000 crore. The move follows a recommendation from the petroleum and natural gas ministry, stating that the levy had served its purpose.
The government has collected ₹44,000 crore from the windfall tax since it was first imposed in July, 2022.
Minister of state for finance Pankaj Chaudhary tabled a notification in Parliament scrapping the levy.
The notification rescinded June 30, 2022 order and withdrew levy of special additional excise duty (SAED) on production of crude oil (which is refined into fuels like petrol and diesel) and on export of aviation turbine fuel (ATF), diesel and petrol, the notification said.
The move follows a recommendation in this regard by the petroleum and natural gas ministry.
"The levy has served its purpose.
..," a government official said.
Separately, the government has also withdrawn the road and infrastructure cess (RIC) levied on export of petrol and diesel.
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At that time, export duties of ₹6 per litre ($12 per barrel) each were levied on petrol and ATF and ₹13 a litre ($26 a barrel) on diesel.
A ₹23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.
FM Nirmala Sitharaman had then said "phenomenal profits" on exports at the expense of domestic availability forced the Centre to impose export duties on petrol, diesel and jet fuel, and the windfall levy, adding that these duties will be reviewed every fortnight in the light of international prices.
The domestic producers of petroleum crude sell their crude at international parity price and as international crude prices rose sharply, these producers made super-normal profits.
The Centre collected ₹25,000 crore in the windfall tax, which came down sharply in FY2024 to ₹13,000 crore.
In the first eight months of the current fiscal year, the Centre has collected ₹6,000 crore.
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