New Delhi: The government has slashed the windfall profit tax by less than half on domestically produced crude oil and also reduced the levy on diesel on Thursday. The revised tax rates become effective from December 2. The tax on crude oil produced by firms such as state-run PSUs Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) has been reduced to Rs 4,900 per tonne from the existing Rs 10,200 per tonne, a government notification issued on Thursday showed.
In the fortnightly revision of windfall profit tax, the government cut the rate on export of diesel to Rs 8 per litre from Rs 10.5 per litre. The levy includes Rs 1.5 per litre as road infrastructure cess.
Special additional excise duty on petrol continues to remain nil
The special additional excise duty on petrol continues to remain nil and that on aviation fuel ATF at Rs 5 a litre.
When the levy was first introduced, a windfall tax on export of petrol alongside diesel and ATF (Aviation Turbine Fuel) too was levied. But the tax on petrol was scrapped in subsequent fortnightly reviews.
Windfall profit tax
While windfall profit tax is calculated by taking away any price that producers are getting above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference of international oil price realised and the cost.
India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre (USD 26 a barrel) on diesel. A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.
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