The windfall duty on domestically produced crude oil has been eliminated by the Finance Ministry, while it has been decreased for diesel. The new levy went into effect on April 4. Despite the fact that the tax has been decreased due to a drop in prices over the past month, this week’s output cuts by oil-producing nations may cause prices to briefly increase. The windfall levy, also known as Special Additional Excise Duty (SAED), will now be zero instead of the previous rate of $3,500 per tonne, according to a notification.
As an example, ONGC will benefit from this.
Entities with less than 2 million barrels per year of annual crude oil output in the previous financial year are not subject to the SAED. Reliance Industries and Rosneft-backed Nayara Energy are the main fuel exporters. In the meantime, the Ministry increased the windfall fee on diesel for export to $0.50 per litre from $0.1. This was done in response to the drop in product prices.
India joined a number of other countries that tax energy company profits above average when it first enacted windfall profit taxes in July of last year. At the time, diesel had a litre export charge of $13 ($26/bbl), while petrol and ATF had a litre export duty of $6 ($12/bbl). The domestic production of crude oil was also subject to a windfall profit tax of 23,250 per tonne ($40/bbl).
Any time the price of oil exceeds a predetermined threshold of $75 per barrel, the government taxes producers’ windfall profits. The records for Special Additional Excise Duty (SAED) on crude oil production aren’t kept separately, according to the Finance Ministry. From the production of crude oil and the export of petrol, diesel and aviation turbine fuel, SAED is expected to be collected in the amount of 25,000 crores for the current fiscal year.
