NEW DELHI: The government has pared windfall gains tax on domestic crude to nil from Rs 3,500 per tonne and halved export tax on diesel to 50 paise per litre on deferred impact of softening in international rates of both in the last 15 days.
This is the first time since July 2022, when the windfall tax was imposed, that domestic producers will not have to pay the additional levy. The additional tax on crude and export duty on fuels were imposed to suck out super profits from soaring oil prices caused by the Ukraine conflict.
Both windfall and export taxes are adjusted in accordance with the average price in the preceding fortnight. So the windfall tax will be back or raised if the voluntary OPEC production cuts announced on Sunday keep oil prices above $80 a barrel.
Similarly, if margins on refined products rise to abnormal levels, export tax on fuels will be raised or reimposed. The Centre is estimated to have mopped up Rs 40,000 crore through the windfall tax. It used 55% of this amount to subsidise losses state-run retailers suffered by not raising domestic LPG prices.
The cut in windfall tax will boost revenue of ONGC and OIL, while the reduction in diesel will be a positive for Reliance and Nayara.
The fuel export tax was imposed to tap super-profits enjoyed by private refiners such as Reliance Industries, who last year preferred to sell abroad for bumper returns but starved their own outlets of products or shut them altogether to avoid losses due to artificially frozen pump prices that did not reflect costs.
The closure or dry out of pumps operated by private sector fuel led to a run on pumps operated by state retailers, who could not cope with sudden rush of demand. This led to fuel shortage in many areas last year, prompting the government to slap the export tax.
This is the first time since July 2022, when the windfall tax was imposed, that domestic producers will not have to pay the additional levy. The additional tax on crude and export duty on fuels were imposed to suck out super profits from soaring oil prices caused by the Ukraine conflict.
Both windfall and export taxes are adjusted in accordance with the average price in the preceding fortnight. So the windfall tax will be back or raised if the voluntary OPEC production cuts announced on Sunday keep oil prices above $80 a barrel.
Similarly, if margins on refined products rise to abnormal levels, export tax on fuels will be raised or reimposed. The Centre is estimated to have mopped up Rs 40,000 crore through the windfall tax. It used 55% of this amount to subsidise losses state-run retailers suffered by not raising domestic LPG prices.
The cut in windfall tax will boost revenue of ONGC and OIL, while the reduction in diesel will be a positive for Reliance and Nayara.
The fuel export tax was imposed to tap super-profits enjoyed by private refiners such as Reliance Industries, who last year preferred to sell abroad for bumper returns but starved their own outlets of products or shut them altogether to avoid losses due to artificially frozen pump prices that did not reflect costs.
The closure or dry out of pumps operated by private sector fuel led to a run on pumps operated by state retailers, who could not cope with sudden rush of demand. This led to fuel shortage in many areas last year, prompting the government to slap the export tax.
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