The Centre on Monday scrapped the windfall tax on Aviation Turbine Fuel (ATF), crude products, petrol and diesel products, after months of deliberations.
The move marks the end of a levy introduced in July 2022, and is set to bring relief to oil conglomerates Reliance and ONGC, as their gross refining margins may get a lift.
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Furthermore, the government has also withdrawn Road and Infrastructure Cess (RIC) on export of petrol and diesel.
The decision on windfall tax is likely to benefit major oil players like Reliance Industries and the ONGC by boosting their gross refining margins—a measure of profitability in refining crude oil.
The decision is expected to benefit major oil players like Reliance Industries and ONGC by boosting their gross refining margins.
However, the tax had become less effective in recent months as global crude oil prices declined, reducing the revenue generated.
It is to be highlighted that a windfall tax is an additional levy imposed on extraordinary or unexpected profits made by companies or industries. India introduced the windfall tax on domestic crude oil production in July 2022, following a sharp rise in global crude oil prices.
The tax aimed to capture excess revenue generated from these unexpected gains.
