The Central government on Thursday cut the windfall tax on crude oil from Rs 9,800 per tonne to Rs 6,300 per tonne. It also reduced the windfall tax on diesel from Rs 2 per litre to Rs 1.
The tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil was increased to Rs 9,800 per tonne from Rs 9,050 a tonne, according to an official notification on October 31 with effect from November 1. Further, the SAED on the export of diesel was reduced to Rs 2 per litre from Rs 4 a litre.
India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel.
The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above USD 75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above USD 20 per barrel.
