The central government on Thursday slashed the windfall tax on domestically produced petroleum crude to ₹6,300 per tonne from ₹9,800 per tonne with effect from November 16. The government has also cut the special additional excise duty (SAED) on the exports of diesel to ₹1 per litre from ₹2 per litre earlier. The windfall tax on aviation turbine fuel (ATF) or petrol, however, continues to remain unchanged.

On Thursday, the NSE Nifty Oil & Gas index was trading 0.98% at 8,194.95. The Brent crude oil benchmark was down 48 cents at $80.70 per barrel at 0630 GMT, whereas the US West Texas Intermediate crude (WTI) tanked 53 cents to $76.13 per barrel.

The government initially imposed the windfall tax on the exports of crude oil, diesel and aviation fuel in July last year, after private refiners preferred overseas markets to gain from high refining margins, instead of selling at lower-than-market rates in the country. The tax rates are revised every fortnight based on prevailing international rates. 

In January, rating agency Moody's said the country’s windfall tax on the exports of locally-produced oil has helped reduce the state-owned refining and marketing companies' marketing losses.

The government had earlier said the prices of petrol and diesel have not been increased by public sector oil marketing companies (OMCs) since April 6, 2022, despite record-high international prices. As a result, the three state-run fuel retailers — Indian Oil Corporation, BPCL and HPCL — booked a combined loss of ₹27,276 crore in the first six months of the last financial year, against the combined profit before tax of ₹28,360 crore in the first half of the financial year 2021-22. IOCL, BPCL and HPCL together control around 90% of the fuel retailing network in India.

The share price of Oil and Natural Gas Corporation Limited closed 1.2% higher at ₹201.85. Shares of Reliance Industries closed 0.27% higher at ₹2,363.35.

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