The government has once again revised the newly-introduced windfall tax levied on crude, diesel and jet fuel (ATF), according to a government notification issued on Tuesday.
The tax on domestically produced crude oil has been raised to ₹17,750 ($226.14) per tonne from ₹17,000 per tonne, while export taxes on jet fuel has been cut to zero from ₹4 per litre.
The excise duty on export of diesel has been reduced to ₹5 per litre from ₹11 per litre earlier. The excise duty on export of petrol continues to be nil.
The new changes will come to effect from tomorrow.
The crude oil prices have skyrocketed following Russia’s invasion of Ukraine and the India’s oil companies recorded more than normal profits as a result of this.
Revenue Secretary Tarun Bajaj recently said the review of taxes on windfall gains on fuel was scheduled to be held soon as the finance ministry was awaiting data on crude prices.
A shortfall of ₹1 lakh crore in revenue that the government faces due to earlier excise duty cuts will not be reversed by this windfall gains tax as the windfall tax will be revised if oil prices come down, Bajaj had said.
India imposed the taxes on 1 July, joining a growing number of countries placing windfall levies to tap energy companies’ booming profits. However, international fuel prices have cooled since then, eroding profit margins at both oil producers and refiners.
While introducing the new levies, India had said that it will review exports and imports of these items every fortnight to amend its decision.
A windfall tax is a one-off tax imposed by the Central Government on a firm. When the company gains from something that they are not responsible for, the financial profit that ensues is called windfall profits.
Usually, the governments levy a one-time tax over and above the normal rates of tax on such profits, which is known as windfall tax.
Due to an increase in government spending following a recent cut in Central Excise Duty and spending more on food and fertiliser, it levied a windfall tax on oil firms to make up for the gap.
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