Windfall tax on crude oil, diesel hiked

The government has hiked the windfall profit tax on crude oil produced in the country and on export of diesel, while bringing back the levy on overseas shipments of ATF.

The government has hiked the windfall profit tax on crude oil produced in the country and on export of diesel, while bringing back the levy on overseas shipments of ATF.

The tax, levied in the form of special additional excise duty, on domestically produced crude oil has been raised to ₹7,100 per tonne from ₹4,250 per tonne, according to an official notification.

Besides, the special additional excise duty (SAED) on the export of diesel has been increased to ₹5.50 per litre from ₹1 per litre. A duty of ₹2 per litre will be imposed on the export of jet fuel or ATF with effect from August 15.

There was no SAED on jet fuel prior to this levy. SAED on petrol will continue to be zero. The new tax rates come into effect from Tuesday, the Order dated August 14, said.

India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal 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 crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) was also levied. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.