New Delhi: The government has reduced the windfall profit tax levied on domestically produced crude oil and on the export of diesel and ATF, in line with softening international oil prices, said an official order. "The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been cut to Rs 1,900 per tonne from Rs 2,100 per tonne," said the order. The new tax rates are effective from Tuesday, it added.
The government has also reduced the tax on export of diesel to Rs five per litre, from Rs 6.5 and the same on overseas shipments of ATF to Rs 3.5 a litre, from Rs 4.5 a litre.
Windfall profit tax on domestically produced crude oil is the second lowest since the new levy was introduced in July 2022. The tax had fallen to Rs 1,700 per tonne in the second fortnight of December 2022. The levy on the export of diesel now equals the lowest hit in the first half of August and October 2022 and the second half of December 2022.
Tax rates were increased at the last fortnightly review on January 3, following a firming up of global oil prices. International oil prices have since then dropped, necessitating the reduction of a windfall tax.
The government levies tax on windfall profits made by oil producers on any price they get above a threshold of USD 75 per barrel.
The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost.
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