FCC

Government raises windfall tax on crude oil

2024-03-06

The windfall tax on petroleum crude would be increased from Rs 3,300 to Rs 4,600 per metric ton, effective from March 1. The government also revealed that, as of the same date, the windfall tax on diesel would be reduced to zero from Rs 1.50 per litre. The tax rates for petrol and aviation turbine fuel would remain unchanged at zero.

The order disclosed that on February 16, the government had previously raised the windfall tax on petroleum crude from Rs 3,200 to Rs 3,300 per metric ton and increased the tax on diesel from zero to Rs 1.5 per litre.

It was further highlighted that India had imposed a windfall tax on crude oil producers starting from July 2022. This levy was extended to exports of gasoline, diesel, and aviation fuel, as private refiners sought to sell fuel internationally to capitalize on strong refining margins rather than selling domestically. The government reiterated that the tax is subject to fortnightly revisions.