Govt issues clarification on windfall tax on oil companies
The Ministry of Petroleum and Natural Gas on Tuesday released a clarification on reports claiming that the government is seeking changes in the levy of Special Additional Excise Duty (SAED) on oil companies
The ministry said that the levy of SAED from July 1, 2022 was accompanied by the government's announcement of a mechanism of fortnightly review and that six such reviews have already taken place since the levy of SAED.
"Selective leakage of any such communication, including one which is six weeks old, without knowledge of context, background or communications made previously or thereafter gives a misleading impression and provides an incomplete picture. Such mischievous reporting is totally uncalled for and raises doubts about the motive behind such reporting," it said.
Crude oil prices witnessed extreme volatility in 2022, resulting in very high prices for end consumers at petrol pumps.
The ministry mentioned that "windfall tax" is one of the measures which helps in dealing with the situation. The extent of its applicability, reference period, amount of cess/ tax/ duty, incidence of tax liability, mechanism for review is integral to such a tax.
Windfall taxes are levied on supernormal profits of energy companies. India first imposed windfall profit tax on July 1, but as international oil prices cooled down since, profit margins of both oil producers and refiners eroded.
The windfall profit tax was increased to Rs 7 per litre from Rs 5 per litre on the export of diesel last month. The government had also brought a Rs 2 per litre tax on ATF exports in the fortnightly review last month.
Govt reduces windfall tax on crude oil from Rs 13,000 to Rs 10,500 per tonne
Government of India, on Friday, revised the windfall tax on domestically-produced crude oil and the export of diesel and Aviation Turbine Fuel (ATF).
According to the notification issued, the windfall tax on locally produced crude oil has been reduced to Rs 10,500 per tonne from Rs 13,300 per tonne and the export tax of diesel to Rs 10 per litre from Rs 13.5. In addition to this, the export tax on jet fuel has been dropped to Rs 5 a litre from Rs 9.
These new rates would come into action from Saturday (September 17), the notification added.
This reduction in the windfall profit tax comes after the drop in international oil prices to six-month lows in September. The crude oil that India buys has averaged $92.67 per barrel in September as against $97.40 in August.
India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners.
Export duties of Rs 6 per litre ($12 per barrel) were levied on petrol and aviation turbine fuel and Rs 13 a litre ($26 a barrel) on diesel. Moreover, Rs 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.
Previously, the duties were partially adjusted in four rounds on July 20, August 2, August 19 and September 1, and were removed for petrol. The latest drop in the domestically-produced crude oil and export of diesel and ATF is the fifth fortnightly review.
