In response to the recent downturn in global crude oil prices, the Government of India has slashed the windfall tax on petroleum crude from Rs 5,200 to Rs 3,250 per metric tonne, effective from 15 June.
This marks the second consecutive reduction in the tax, following a similar adjustment earlier this month.
Due to the recent decline in international crude oil rates, the Government has adjusted the windfall tax downward, reviewing it every fortnight based on the average crude prices of the preceding period.
In the fortnight beginning 1 June, the Government had previously lowered the tax from Rs 5,700 to Rs 5,200 per metric tonne.
This move will benefit upstream oil exploration and production giants. Companies like ONGC (Oil and Natural Gas Corporation) and Oil India Ltd will particularly benefit, as they are subject to this tax based on their crude oil output.
In July 2022, authorities initiated the windfall tax mechanism to regulate the activities of private refiners amidst robust refining margins in the international market.
On April 16, due to soaring crude oil prices driven by escalating geopolitical tensions, the government increased the windfall tax on petroleum crude from Rs 6,800 to Rs 9,600 per metric ton.
Although crude prices surged by 16% in the first quarter of 2024, they have since been on a downward trend.
Furthermore, the scope of the windfall tax was extended to include exports of gasoline, diesel, and aviation fuel, following reports of private refineries profiting significantly from overseas sales at the expense of the domestic market.
However, the tax rates for these fuels remain unchanged in the current revision.
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