India cuts windfall tax on crude oil from Rs 3,500 to zero; tax on diesel halved
New Delhi, April 4: The Central Government has withdrawn all windfall tax on crude oil with immediate effect, according to a government notification.
The windfall tax on crude oil has been cut to zero from Rs 3,500 ($42.56) a tonne and tax on diesel has been halved to 0.5 rupee per litre, says the government notification issued on Tuesday. This comes at a time when global crude oil prices rose after the group of oil-producing countries decided to cut output come May this year.
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Notably, India in July imposed a windfall tax on crude oil producers and on exports of gasoline, diesel and aviation fuel, to encourage private refiners to sell fuel products domestically instead of shipping them overseas to take advantage of robust refining margins in global markets.
The Organisation of the Petroleum Exporting Countries (OPEC) Plus oil producers announced further output cuts of around 1.16 million barrels per day. Taking into account huge margins being accumulated by the domestic crude producers due to rising global crude prices, the Centre had in July 2022 imposed a cess of Rs 23,250 per tonne on crude oil. Since then, the government from time to time had been reducing the windfall tax on crude oil.
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A tax levied on an unforeseen or unexpectedly large profit is called a windfall tax. The government adjusts the tax rates twice a month according to global crude oil price movements.
- With inputs from agencies
