New Delhi: The government is considering the removal of windfall tax on domestic crude oil as global crude oil prices have moderated since 2022 when the tax was first imposed, said Tarun Kapoor, advisor to Prime Minister Narendra Modi. Speaking to reporters on the sidelines of the World Biogas Association India Congress 2024 on Wednesday, Kapoor said that the Ministry of Petroleum and Natural Gas has written to the Ministry of Finance, seeking withdrawal of the windfall tax.
“I think the petroleum ministry has written to the finance ministry. Anyway, there is not much relevance in it now,” said Kapoor.
Windfall tax was first imposed in 2022 when global oil prices soared to historical highs in the aftermath of Russia’s invasion of Ukraine. This allowed oil producers to make windfall profits, especially private players like Reliance which was producing oil from its fields, refining it and was exporting it to other countries at a premium instead of offering it in the domestic market. The tax was levied in the form of Special Additional Excise Duty (SAED) and was reviewed every fortnight based on the average of crude oil prices for two weeks. However, since September 18 this year, the windfall tax on domestic crude oil has been nil and windfall tax on export of diesel and jet fuel is also nil.
Crude oil prices have remained moderate, hovering around USD 75 per barrel, despite volatility in the global markets and conflicts in West Asia.
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