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The Ministry of Finance on Friday lowered the windfall profit tax on export of diesel to ₹8.50 per litre and jet fuel exports to ₹5 a litre, besides lowering the levy on domestically-produced crude due to a fall in global oil prices. Earlier, these levies were ₹13.5 and ₹9 a litre, respectively.
The tax on domestically-produced crude oil has been cut to ₹10,500 per tonne from ₹13,300. New rates will come into effect from September 17, according to a notification issued by the Ministry.
The tax on exports has been lowered as margins came down, while the levy on domestically-produced oil was reduced due to softening of oil prices globally.
India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners.
On July 1, 2022, export duties of ₹6 per litre ($12 per barrel) were levied on petrol and ATF and a ₹13 a litre tax on the export of diesel ($26 a barrel). A ₹23,250 per tonne windfall profit tax on domestic crude production ($40 per barrel) was also levied.
Thereafter, in the first fortnightly review on July 20, the ₹6 a litre export duty on petrol was scrapped and the tax on the export of diesel and jet fuel (ATF) was cut by ₹2 per litre each to ₹11 and ₹4, respectively. The tax on domestically-produced crude was also cut to ₹17,000 per tonne.
On August 2, the export tax on diesel was cut to ₹5 a litre and that on ATF scrapped, following a drop in refinery cracks or margins. But the levy on domestically-produced crude oil was raised to ₹17,750 per tonne, in line with a marginal increase in international crude prices.
On August 19, the export tax on diesel was hiked to ₹7 a litre, while a ₹2 per litre tax on ATF was brought back. The levy on domestic crude oil output was cut to ₹13,300 per tonne, in line with the softening of crude prices. At the fourth fortnightly review on August 31, the taxes on diesel and ATF exports and domestically-produced crude oil were raised.
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