The government has hiked the windfall tax on petroleum crude by almost 84% from ₹3,250 to ₹6,000 per metric tonne. The Special Additional Excise Duty (SAED) will not be imposed on the export of diesel, petrol, and aviation turbine fuel, the statement says.
The windfall profit tax was first introduced under the Central Excise (Amendment) Rules, 2022, by the Ministry of Finance in June 2022. The tax rates then were as high as ₹23,250 per tonne, however, these are revised every two weeks and were last revised on June 14, 2024. The rates are dependent on the average oil prices internationally.
Taxation on crude oil production and the export of motor spirit, diesel, and aviation fuel to regulate private refiners was introduced for firms that intended sale of fuel abroad instead of supplying the fuel domestically to gain from robust refining margins. Like India, several European nations levy a windfall tax on supernormal profits to energy companies.
The government revised the rates in June this year, making a near 37.5% reduction in the rates from ₹5,200 per tonne to ₹3,250 per metric tonne. The tax rates were the highest in mid-April pegged at ₹9,600 per tonne.
Presently, India is the third-largest oil consumer country in the world after the US and China. The country relies heavily on imports for over 85% of its crude oil requirements. Oil prices have increased recently due to anticipated higher demand this summer and due to concerns about supply shortages because of production cuts by OPEC later this year.
The Indian basket of crude oil represents a derived basket comprising Sour grade (Oman & Dubai average) and Sweet grade (Brent Dated) of Crude oil processed in Indian refineries in specific ratios. Crude Oil prices are the average of each component’s daily prices in each month.
Nifty Oil & Gas index as of presently is at 12,318.50, seeing a 0.88% increase from yesterday. Of the stocks included in this index, only 2 have declined from yesterday, while the remaining 13 have been on the rise, with Adani Total Gas Limited (ATGL) shares soaring by 4.10% and Oil India Limited growing by 2.52%.
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