On January 1, Monday, the Indian government declared an augmentation in the windfall tax imposed on domestically produced crude petroleum.
However, this move coincided with a reduction in taxes on diesel and aviation turbine fuel. The government declared the abolition of the Rs 0.5 per litre tax on diesel and the elimination of a Re 1 per litre windfall tax on aviation fuel.
In an official notification, the Government of India has raised the windfall tax on crude oil from Rs 1,300 to Rs 2,300 per ton.
During the review held on December 18, the government had imposed a reduction in the windfall profit tax on domestically produced crude oil, decreasing it from Rs 5,000 to Rs 1,300 per tonne. While there were reductions in SAED for diesel exports, there was a simultaneous increase in Aviation Turbine Fuel (ATF) taxes.
On December 1, the government reduced the windfall tax on crude petroleum from Rs 6,300 to Rs 5,000. Moreover, in the preceding review on November 16, there was again a substantial cut in the windfall tax, decreasing it by Rs 3,500 from Rs 9,800 to Rs 6,300 per tonne.
This development comes at a time when the nation patiently awaits the scheduled elections later this year, imparting a heightened sense of importance to the unfolding events.
In July 2022, India implemented its first windfall tax on crude oil producers, extending the tax to cover the export of gasoline, diesel, and aviation fuel. A windfall tax is imposed on domestically produced crude oil when global benchmark rates surpass $75 per barrel.