Centre revises windfall tax levied on crude, diesel and jet fuel

The government has again revised the newly introduced windfall tax levied on crude oil, diesel and jet fuel (ATF), according to a government notice issued Tuesday.

Tax on domestically produced crude oil has been increased to 17,750 ($226.14) per tonne from 17,000 per ton, while the export tax on aviation fuel has been reduced to zero from 4 per litre.

The excise duty on diesel exports has been reduced to: 5 per liter from 11 a liter before. The excise duty on the export of petrol remains nil.

The new changes will take effect from tomorrow.

Crude oil prices skyrocketed after the Russian invasion of Ukraine and Indian oil companies posted more than normal profits as a result.

Finance Minister Tarun Bajaj recently said the tax review on unexpected gains on fuel would take place once the Ministry of Finance awaited data on crude oil prices.

a shortage of 1 lakh crore in revenue facing the government as a result of previous excise tax cuts will not be reversed by this windfall as the windfall tax will be revised if oil prices fall, Bajaj had said.

India imposed taxes on July 1, joining a growing number of countries introducing windfall taxes to tap the huge profits of energy companies. Since then, however, international fuel prices have fallen, eroding profit margins at both oil producers and refineries.

While India introduced the new duties, it had said it would review exports and imports of these products every two weeks to change its decision.

A windfall tax is a one-off tax levied by the national government on a company. When the company takes advantage of something for which it is not responsible, the financial gains that result are called windfalls.

Usually, the governments levy a one-time tax on top of the normal tax rates on such profits, which is known as a windfall tax.

Due to a surge in government spending following a recent cut in central excise taxes and increased spending on food and fertilizers, it is levying a windfall tax on oil companies to fill the gap.

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