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Finance Ministry, late on Tuesday, raised the windfall gain tax on the domestically produced petroleum crude, but has lowered export levies on diesel and jet fuel (Aviation Turbine Fuel).
This is the second revision after export levies were imposed on July 1. The revision is done fortnightly and the revised levies will be effective August 3.
The increase in windfall gain tax is negative for companies such as Reliance, ONGC, and Oil India.
According to notifications issued by the Central Board of Indirect Taxes & Custom (CBIC), the windfall gain tax on petroleum crude produced domestically will now be ₹17,750 as against ₹17,000 per tonne. Initially, it was ₹23,250 per tonne, which was cut to ₹ 17,000 per tonne on July 18. One of the reasons for raising the windfall gain tax could be rise in the crude prices.
The decision to impose the windfall gain tax followed the sharp rise in the crude prices in recent months. The domestic crude producers sell to refineries at international parity prices thereby making windfall gains. Considering this, a cess was imposed. Imported crude was not subject to this cess.
The government has already clarified that this cess will have no adverse impact on the pump prices. Further, small producers, whose annual production of crude in the preceding financial year was less than 2 million barrels, are exempt from the cess. Also, to incentivise additional production over the preceding year, no cess has been imposed on the quantity of crude produced in excess of last year’s output.
Export of diesel and Jet Fuel
The notification said that export levies on diesel have been lowered from ₹11 per litre to ₹5 a litre , while it has been removed from ATF which was earlier ₹4 per litre. On the export of petrol, the NIL duty has been continued.
On the export levy on diesel, the Ministry’s reasoning was that with crude oil becoming costlier, prices of diesel, petrol, and ATF have increased sharply. Thus, exporting these products at high global prices became so remunerative that some refiners dried out their pumps in the domestic market. The cess was imposed to curb exports and to keep the domestic market supplied. Now, this will continue on diesel which has very high domestic consumption.
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