The tax cut on petrol, diesel, aviation fuel comes amid a global decline in crude oil rates as concerns grew abour a potential global recession in the aftermath of the pandemic and Russia’s war with Ukraine.
The Centre on Wednesday slashed the windfall tax on crude oil producers and exempted petrol, diesel and jet fuel from an export levy, likely resulting in a price drop that may provide some relief to consumers. The tax cut was announced just weeks after the government imposed the two charges, in line with a decline in international rates.
The changes come into effect today.
Companies including Reliance Industries, Oil and Natural Gas Corp and Oil India Ltd are expected to benefit from the decision.
The government reduced the windfall tax on diesel and aviation turbine fuel (ATF) by ₹2 a litre and scrapped a ₹6 per litre tax on export of petrol. The tax on ATF has now been cut to ₹4 a litre from ₹6 and on diesel to ₹11 from ₹13 per litre, according to finance ministry notifications.
Further, the ₹23,250 per tonne additional tax on crude oil produced domestically has been cut to ₹17,000 per tonne.
India imposed the taxes on July 1, joining a growing list of nations placing windfall levies to tap on energy companies’ booming profits. As international fuel prices cooled down, the profit margins at both oil producers and refiners also started fading.
International crude prices started a downward trend since mid-June after concerns about a potential global recession, at one point erasing all the gains that followed Russia’s invasion of Ukraine. Returns from processing gasoline and diesel in Asia have plunged in recent weeks, with industry consultant FGE expecting a further decline in margins this quarter due to increased supplies.
(With agency inputs)
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