The Government is committed to stick to the fiscal deficit target of 6.4 per cent during current fiscal i.e., 2022-23 or FY23, a top government official said here on Monday. Meanwhile, another official said that no cap or deadline has been fixed for withdrawal of windfall gain tax.

This remark has come at a time when there is an apprehension about a rise in the twin deficits – fiscal and current account. The government has levied windfall gain tax on domestically-produced crude, besides export duty on petrol and diesel and ATF and increasing import duty on gold various while a number of economists feel there is an upside risk to twin deficits.

“India‘s macroeconomic fundamentals are strong to deal with global challenges,” the official said while adding that the government is taking steps to deal with the spiralling crude oil prices in the international market. India is dependent on crude imports to meet 85 per cent of its domestic needs and a weaker rupee makes imports costlier. Commodity prices, including of crude oil, are ruling high due to the ongoing Ukraine war and have led to inflationary pressures across countries, including India.

Windfall gain tax

Meanwhile, Vivek Johri, Chairman of the Central Board of Indirect Taxes & Custom (CBIC), said there was no cap decided yet for review of the windfall tax. “No, we haven’t thought of that,” he said when asked about the level for reviewing the windfall tax.

“The rates will be reviewed every 15 days depending on how the prices of crude and refined products behave in the international market.” On the $40 per barrel decline cap for a review, he asked, “You expect it to fall by$40?”. “There isn’t such thinking yet. It is a very dynamic thing, so we have to wait and watch,” he said.

The government on July 1 imposed a ₹6 per litre tax on the export of petrol and ATF and ₹13 on the export of diesel. Additionally, a ₹23,250 per tonne tax was levied on crude oil produced domestically.

Finance Minister Nirmala Sitharaman had last week said that “phenomenal profits” made by some oil refiners on exporting fuel at the expense of domestic supplies had prompted the government to introduce an export tax on petrol, diesel and ATF. The government also framed new rules requiring oil companies exporting petrol to sell in the domestic market, the equivalent of 50 per cent of the amount sold to overseas customers, for the fiscal year ending March 31, 2023. For diesel, this requirement has been put at 30 per cent of the volume exported.

These restrictions on export are also aimed at shoring up domestic supplies at petrol pumps, some of which had dried up in Madhya Pradesh, Rajasthan and Gujarat as private refiners preferred exporting fuel to selling locally.