In contrast to the increase in the tax on diesel and ATF exports, the government has reduced the windfall profit tax on domestically produced crude oil. The special additional excise duty, or SAED, paid on domestically produced crude oil was decreased from Rs 7,100 per tonne to Rs 6,700 per tonne. According to the announcement, SAED on diesel exports was raised to Rs 6 per litre from Rs 5.50 per litre and on jet fuel or ATF to Rs 4 per litre from Rs 2. Petrol exports will continue to have no SAED.
The directive dated September 1 said that the increased tax rates took effect on Saturday. On July 1 of last year, India introduced windfall profit taxes for the first time, joining a growing list of countries that tax energy companies’ above-average profits. At that time, there were export taxes on petrol and ATF of Rs 6 per litre (USD 12 per barrel) apiece, and on diesel of Rs 13 per litre (USD 26 per barrel).
On crude oil produced by businesses like Oil and Natural Gas Corporation (ONGC), a windfall profit tax of Rs 23,250 per tonne (USD 40 per barrel) was also imposed. Every two weeks, the tax rates are revised based on the average oil price for the previous two weeks.
International crude oil prices averaged USD 86.43 per barrel in August, up from USD 80.37 in the preceding month and USD 74.93 a barrel in June. The levy on domestic crude oil dropped to nil in the first half of April as international crude oil prices fell but was back in the second half in step with a rise in rates.
In April, the diesel levy was eliminated, but it was reinstated in August. Levy on ATF was eliminated in March and reinstated in the latter half of August. The very first review eliminated the petrol export tax. Petrol, diesel, and aircraft turbine fuel (ATF) are all made from refined crude oil that is extracted from the earth and the ocean floor. The country’s main fuel exporters are Reliance Industries Ltd., which runs the largest single-location oil refinery complex in the world in Jamnagar in Gujarat, and Nayara Energy, which is supported by Rosneft.
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