Government’s windfall tax seen netting $12.7 billion, cut budget gap

India’s decision to impose windfall taxes on fuel exports last week will offset May’s excise duty cut on domestic prices of petrol and diesel, and help lower the budget gap in the current fiscal year, economists said.

The taxes on production of crude, and exports of petrol, diesel and aviation fuel could garner about 1 trillion rupees ($12.7 billion) for the government if the levies continue for the rest of the fiscal year ending in March, Mumbai based Kotak Mahindra Bank Ltd. economists Suvodeep Rakshit, Upasna Bhardwaj and Anurag Balajee wrote in their report.

India on Friday joined a growing number of nations that are taxing energy firms to cope with surging costs.