► Date : Jan 16, 2023

On Monday, India reduced the windfall tax on crude oil from Rs 2100 per tonne to Rs 1900 per tonne.

It has also reduced the ATF levy to Rs 3.5 per litre from Rs 4.5 per litre previously, and the export duty on diesel to Rs 5 per litre, including cess.

From July, India imposed a windfall profit tax, joining the ranks of countries that tax supernormal profits from energy companies.

The government has insisted that the levy was imposed in response to the windfall profits made by domestic crude producers and refiners as a result of high global crude and product prices.

Since then, the rates have been revised every two weeks.

Windfall profit tax on domestically-produced crude oil is the second lowest since the new levy was introduced in July 2022. The tax had fallen to Rs 1,700 per tonne in the second fortnight of December 2022.

The levy on the export of diesel now equals the lowest hit in the first half of August and October 2022 and the second half of December 2022.

Tax rates were increased at the last fortnightly review on January 3, following a firming up of global oil prices. International oil prices have since then dropped, necessitating the reduction of a windfall tax.

India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre (USD 26 a barrel) on diesel.