The central government raised the windfall tax on locally produced crude oil while lowering the rate on diesel exports. According to a government announcement, the change takes effect today, November 17th.
According to a government notification, the tax on crude oil produced by companies such as the state-owned Oil and Natural Gas Corporation (ONGC) has been raised to $10,200 per tonne, up from $9,500 per tonne, effective November 17.
The windfall tax, applied as a special supplementary excise duty, is intended to absorb exceptional profits produced by domestic crude oil producers and is reviewed every two weeks.
The government reduced the rate of fuel export to 10.5 per liter from 13 per liter in the fortnightly review of a windfall tax. The diesel levy includes a 1.50 per liter road infrastructure cess.
While the windfall profit tax is computed by deducting any price above a certain level, the fee on petroleum exports is based on cracks or margins earned by refiners on foreign shipments. These margins are essentially determined by the difference between the realized international oil price and the cost.
On July 1, India became the first country to impose windfall profit taxes on energy companies, joining a growing list of countries that do so. At the time, export duties on petrol and aviation turbine fuel were 6 per liter (USD 12 per barrel), and diesel was 13 per liter (USD 26 per barrel). A windfall profit tax of $23,250 per tonne (USD 40 per barrel) was also imposed on domestic crude production.
In previous rounds, duties were partially adjusted on July 20, August 2, August 19, September 1, September 16, October 1, October 16, and November 1.