From ₹4,100 per tonne, the government has cut the windfall tax to nil per tonne. As per the government’s notification, the aforementioned will be in effect from Tuesday. The government left the windfall tax at zero for gasoline, diesel and aviation turbine fuel. Weekly adjustments to tax rates are made by the government based on changes in the price of oil.
The government reduced the windfall tax on petroleum crude on May 1 from 6,400 rupees per tonne to 4,100 rupees ($50.14) per tonne. On April 19, the tax on crude was raised to 6,400 rupees per tonne. India reduced the windfall tax on crude oil from 3,500 rupees per tonne to zero on April 4.
India implemented the windfall tax on crude oil producers in July and increased the levy on the exports of petrol, diesel and aviation fuel in response to private refiners who preferred to profit from high refining margins in foreign markets to domestic sales.
Every two weeks, the tax rates are adjusted based on the two-week average of oil prices. On Monday, oil prices increased by about $1 per barrel due to the possibility of constrained supplies in Canada and elsewhere, though market pressure from recession fears persisted.
Production of at least 300,000 barrels of oil was halted in Alberta last week. More than a million barrels of oil equivalent per day (boepd) of production there was shut down in 2016 due to wildfires. Crude oil is refined and transformed into fuels like petrol, diesel and ATF after it is extracted from the ground and the ocean floor.
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. At the time, export taxes on petrol, ATF and diesel were each charged at the rate of Rs 6 per litre ($12 per barrel), and Rs 13 per litre ($26 per barrel). A windfall profit tax of Rs 23,250 per tonne ($40 per barrel) was also imposed on domestic crude production.
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