India Increases Windfall Tax on Petroleum Crude To Rs 3,200 Per Tonne

India opted to increase windfall tax on petroleum crudeon Saturday to 3,200 rupees/tonne from Rs 1,700 per tonnewhile retaining the windfall tax on diesel and aviation turbine fuel at zero, the government said on February 2. Earlier this year on January 16, the Central Government slashed windfall tax on petroleum crude from Rs 2,300 per tonne.

India imposed a windfall tax on crude oil producers from July 1, 2022 and stretched 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. It revises the tax every two weeks, according to a Reuters report.

The windfall tax undergoes fortnightly revisions, contingent upon the fluctuations in international crude and product prices. Presently, crude oil prices are trading at approximately $82 per barrel.India initially introduced the windfall tax in July 2022 in response to the escalating price of crude oil.

This tax is imposed by governments when an industry unexpectedly generates substantial profits, typically attributed to an unprecedented event, added the Reuters report.

A windfall tax is levied on domestically produced crude oil when the rates of the global benchmark exceed $75 per barrel. For the export of diesel, aviation turbine fuel (ATF), and petrol, the levy is applicable when the product cracks, or margins, surpass $20 per barrel