In addition to raising the windfall profit tax on domestically produced crude oil and diesel exports, the government has also reinstated the tax on international shipments of ATF. An official statement states that the tax on locally produced crude oil, which takes the form of a special supplementary excise charge, has increased from Rs 4,250 per tonne to Rs 7,100 per tonne. Additionally, the special additional excise duty (SAED) on diesel exports has increased from Re 1 per litre to Rs 5.50 per litre.
Jet fuel or ATF exports will be subject to a 2 rupee per litre tariff beginning on August 15. Before this tax, there was no SAED on jet fuel. SAED for gasoline will remain at zero. The directive dated August 14 said that the increased tax rates took effect on Tuesday.
On July 1 of last year, India implemented its first windfall profit tax, joining an increasing number of countries that tax energy companies’ above-average profits. The export taxes at the time were Rs 6 per litre (USD 12 per barrel) for petrol and ATF and Rs 13 per litre (USD 26 per barrel) for diesel.
If prices of the international benchmark increase to over USD 75 per barrel, a windfall tax is imposed on domestic crude oil. Diesel, ATF, and petrol exports are subject to a fee if product cracks (or margins) exceed USD 20 per barrel.
The distinction between crude oil (raw material) and finished petroleum products is made by product cracks or margins. In August, the average price of international crude oil was USD 86.8 per barrel, up from USD 80.37 in July and USD 74.93 in June.
Due to a decline in global crude oil prices in the first half of April, the domestic crude oil tax decreased to zero, but it returned in the second half of the month in response to an increase in interest rates.
In April, the diesel levy was eliminated, but it was reinstated in August. Levy on ATF was eliminated in March and has since been reinstated. Petrol, diesel, and aircraft turbine fuel (ATF) are all made from refined crude oil that is extracted from the earth and the ocean floor.
