Windfall profit tax on crude oil slashed; tax on diesel, ATF export cut

Levy on crude oil produced by companies such as ONGC was cut steeply to ₹1,700 per tonne from ₹4,900

The government has slashed the windfall profit tax levied on domestically-produced crude oil as well as on export of diesel and ATF following a decline in global oil prices, according to an official order.

The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been cut steeply to ₹1,700 per tonne from ₹4,900, according to the order dated December 15.

Crude oil pumped out of the ground and from below seabed is refined and converted into fuel like petrol, diesel and aviation turbine fuel (ATF).

The government has also cut the tax on export of diesel to ₹5 per litre from ₹8 and the same on overseas shipments of ATF to ₹1.5 a litre from ₹5. The new tax rates are effective from December 16.

The reduction in tax rates follows a 14% slump in global crude oil prices since November.

India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super-normal profits of energy companies. At that time, export duties of ₹6 per litre ($12 per barrel) each were levied on petrol and ATF and ₹13 a litre ($26 a barrel) on diesel.

A ₹23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied. Export tax on petrol has since been scrapped.