Crude oil windfall tax hike, diesel fuel export levy


The tax on crude oil produced by companies such as the state-owned Oil and Natural Gas Corporation (ONGC) has been raised to 10,200 rupees per ton, from 9,500 rupees per ton, with effect from November 17, according to a notification from the government.

The government on Wednesday increased the windfall tax on locally produced crude oil while reducing the export rate of diesel.

The tax on crude oil produced by companies such as the state-owned Oil and Natural Gas Corporation (ONGC) has been raised to 10,200 rupees per ton, from 9,500 rupees per ton, with effect from November 17, according to a notification from the government.

During the fortnightly windfall tax review, the government reduced the diesel export rate to Rs 10.5 per litre, from Rs 13 per litre. The diesel tax includes a road infrastructure tax of Rs 1.50 per litre.

The export tax on jet fuel or ATF, which was set at Rs 5 per liter in the last review on November 1, has not been changed.

When the levy was first introduced, an exceptional export tax on petrol alongside diesel and ATF was also levied. But the gasoline tax was removed in later bimonthly reviews.

While the windfall tax is calculated by removing any price producers get above a threshold, the levy on fuel exports is based on the cracks or margins refiners earn on shipments to the stranger. These margins are primarily a difference between the realized international price of oil and the cost.

India imposed windfall taxes for the first time on July 1, joining a growing number of countries that tax the super normal profits of energy companies. At that time, export duties of 6 rupees per liter ($12 per barrel) were levied on gasoline and jet fuel and 13 rupees per liter ($26 per barrel) on diesel. A windfall tax of Rs 23,250 per tonne ($40 per barrel) on domestic crude production was also levied.

Fees were partially adjusted in previous cycles on July 20, August 2, August 19, September 1, September 16, October 1, October 16 and November 1.


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