The Narendra Modi government has slashed the so-called windfall tax on domestic crude oil producers and refiners and withdrawn the Rs 6 per litre levy on petrol exports, less than three weeks after unveiling plans to gouge the petroleum industry’s fortunes and fatten its parlous coffers.
The rollback of the levies was designed to head off mounting criticism from political rivals that the fuel taxes that came straight out of the blue would ignite retail inflation, currently at 7.01 per cent. In a notification issued on Wednesday, the government said it had decided to reduce the duty on the exports of diesel and aviation turbine fuel (ATF) by Rs 2 a litre to Rs 10 and Rs 4 per litre, respectively.
The Centre also reduced the windfall tax on domestically produced crude by 26.8 per cent to Rs 17,000 a tonne from Rs 23,250, a move that will benefit producers such as ONGC and Vedanta Ltd. The government also exempted fuel exports from refineries located in export-focused zones from the scope of the levy, which will benefit private refiners like Reliance Industries and Rosneft-backed Nayara Energy Ltd, which roughly account for 85 per cent of India’s overall petrol and diesel exports.
