New Delhi: The government has announced on Wednesday its decision to do away with the windfall tax on petrol and slash the levy on other fuels like diesel and ATF (Aviation Turbine Fuel) less than three weeks after they were imposed. The Centre has scrapped Rs 6-a-litre tax on export of petrol. And the windfall tax on ATF has been reduced from Rs 6 a litre to Rs 4. Besides, the tax on diesel has been reduced to Rs 11 from Rs 13 per litre, according to Finance Ministry notifications.
The Rs 23,250 per tonne additional tax on crude oil produced domestically has been cut to Rs 17,000 per tonne. The decision comes as global crude oil prices have slumped since mid-June on account of concerns over a potential global recession.
The government had imposed the windfall tax on July 1 to impose a cess on the windfall gains made by upstream firms such as ONGC (Oil & Natural Gas Corporation) and Reliance from their sales at international parity prices to refiners. However, global crude oil prices have cooled down since then, eroding the profit margins of both oil producers and refiners.
The tax on export of fuels like petrol and diesel was imposed to check refiners’ growing tendency to sell in the export markets, while ignoring the domestic demand.
Brent crude cools off
Brent crude prices has went down by USD 15-20 per barrel (bbl) in the last two-three weeks to about $100/bbl now, resulting in a crash in the refining spreads of refiners and hitting a blow to the ‘super-normal’ gains made by crude oil producers as well. Reliance and Rosneft-backed Nayara were the worst hit from the taxes imposed on transport fuel since the two make up for 80-85 percent of India’s petrol and diesel exports.
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