Oil Stocks Tumble After Government Hikes Windfall Tax On Crude Oil

Oil companies witnessed a setback in share prices as the government raised the windfall tax on domestically produced crude
Windfall Tax on Crude Oil
Windfall Tax on Crude Oil

Oil companies witnessed a sharp decline on Thursday as the government hiked the windfall tax on domestically produced crude from Rs 4,900 per tonne to Rs 6,800 per tonne, starting April 4.

While ONGC (Oil and Natural Gas Corp.) declined by over 2.1 per cent, Oil India witnessed a nearly 2 per cent decline. Hindustan Petroleum Corp Ltd (HPCL), on the other hand, closed the day at Rs. 461 price level, marking a decrease of 2.83 per cent. Meanwhile, Bharat Petroleum Corporation Ltd (BPCL) ended at Rs. 600 per share, down by 1.72 per cent. India Oil Corporation Ltd. (IOC), followed suit and concluded the day at Rs. 170, reflecting a plunge of 2.13 per cent.

Export duties on diesel, petrol, and Aviation Turbine Fuel (ATF) will remain at zero. The government imposes a windfall tax on domestic crude oil producers when global market prices exceed $75 per barrel.

In July 2022, India introduced windfall tax on crude oil producers and expanded it to include exports of gasoline, diesel, and aviation fuel. This decision was made in response to private refiners' preference for selling fuel overseas to take advantage of refining margins instead of selling domestically.

On an annual basis, several oil companies have yielded multibagging returns for investors. For instance, both Hindustan Petroleum Corp Ltd and India Oil Corporation have delivered triple-digit returns, with increases of 104 per cent and 120 per cent respectively.

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