The windfall tax on all domestically produced crude oil was increased by the centre from zero to Rs 6,400 per tonne. Additionally, the government eliminated the SAED, which had been charged at a rate of 0.5 rupees per litre. For the continued export of petrol and ATF (aviation turbine fuel), windfall tax exemptions are granted. These adjustments to the tax rates will take effect starting on Wednesday, April 19. In the previous revision, the centre reduced the domestic crude production cut to zero and diesel SAED by half, from Re 1 to Rs 0.5 per litre.
Windfall profit taxes were first applied to Indian businesses on July 1, 2022, when the nation joined an increasing number of countries that tax energy corporations’ above-average profits. The profit margins of both oil producers and refiners have declined since then as global oil prices have fallen. Any price that oil producers receive that is more than a cap of USD 75 per barrel is subject to taxation by the government. The tax on petroleum exports is based on the cracks or margins that refiners make on international shipments. These margins essentially reflect the discrepancy between actual worldwide oil prices and costs.
The central government reviews the windfall tax every two weeks with the goal of absorbing the superprofits made by domestic crude oil producers as a result of high global petroleum product prices. Depending on the price of crude and the refining spread, the levies’ rates fluctuate. In July of last year, the Indian government enacted the windfall tax on crude oil producers and levies on the exports of petrol, diesel and aviation fuel in response to private refiners that sought foreign markets in order to profit from strong refining margins rather than selling at below-market prices domestically.
Early on in Wednesday’s Asian trading, oil prices increased as dropping U.S. crude stocks and positive Chinese growth statistics suggested that fuel demand was on the rise. Brent crude futures increased 7 cents to $84.84 a barrel. To reach $80.89 per barrel, West Texas Intermediate U.S. crude gained 3 cents. Fears that prospective hikes in U.S. interest rates could stifle growth in the top oil consumer nation prevented prices from rising, according to Reuters.