The government on Friday announced an increase in taxes on the export of petrol, diesel, and aviation turbine fuel (ATF). The centre has also mandated exporters to meet the requirements of the domestic market first. The government has levied a ₹6 per litre tax on exports of petrol and ATF and ₹13 per litre on exports of diesel.
The government has also announced taxes on windfall gains made by crude oil producers. The government also slapped a ₹23,230 per tonne additional tax on domestically produced crude oil to take away windfall gains accruing to producers from high international oil prices, a separate government notification showed.
Shares of Reliance Industries Ltd (RIL), Oil and Natural Gas Corporation (ONGC) witnessed a sharp fall after the export tax hike announcement. RIL shares plunged more than 5%, its biggest decline in about 18 months, whereas ONGC shares tanked 10% in Friday’s early deals, while BSE Sensex was down nearly a per cent.
“Reliance is witnessing a sharp fall after the Government has levied taxes on windfall gains made by domestic refineries. Earlier Reliance was firing on all cylinders but now there is a break in its refinery business as the commodity cycle is also reversing however other verticals have strong growth potential,” said Santosh Meena, Head of Research, Swastika Investmart Ltd. Fuels from Mukesh Ambani-led RIL’s Jamnagar refinery are exported to several countries across the world.
Gasoline exporters have been asked to give a self declaration that 50% of the quantity mentioned in the shipping bill has been or will be supplied to the domestic market during the current financial year.
The tax on exports follows oil refiners, particularly the private sector, reaping huge gains from exporting fuel to markets such as Europe and the US. The tax on domestically produced crude oil follows local producers reaping windfall gains from the surge in international oil prices.
Domestic petrol and diesel prices have been steady since May when the government announced a cut in excise duty on petrol by 8 per litre, and 6 rupees per litre on diesel on May 21, 2022. The domestic fuel prices are likely to remain low as the taxes announced today by the government do not impact them.
