In a recent move, the government has hiked the windfall tax on crude oil while reducing the tax on diesel and aviation turbine fuel.
According to a government notification, the on petroleum crude oil has been hiked to Rs 2,300 a tonne from Rs 1,300.
A tax on diesel of Rs 0.5 per litre was eliminated, it said as was a Re 1 per litre windfall tax on aviation fuel.
India imposed a windfall tax on crude oil producers in July 2022. It extended the levy on exports of gasoline, diesel and aviation fuel as private refiners wanted to sell fuel overseas to make gains from robust refining margins instead of selling locally.
On November 1, the government had increased the windfall tax on petroleum crude to Rs 9,800 per tonne from Rs 9,050 per tonne. It also reduced the windfall tax on diesel to Rs 2 per litre from Rs 4 per litre.
The decision to impose the windfall tax in 2022 was believed to be taken in view of the decline in the international oil price and widespread opposition from the oil and gas industry. It was also done to curb the country’s widening deficit amid sustained high oil prices.
Windfall Tax is a one-time tax that is imposed on entities that have made huge profits due to favourable market conditions. Government imposes this tax so that in return they can increase their revenue.