The Finance Ministry has lowered the windfall levy on domestically produced crude oil, while raising it on diesel. The revised levy has come into effect as of Tuesday i.e., March 21, 2023.
According to a notification, windfall levy, technically known as Special Additional Excise Duty (SAED), has been lowered to Rs 3,500 per tonne as against Rs 4,400 per tonne. One of the reasons could be the fall in global crude oil prices. This will benefit companies such as Oil and Natural Gas Corporation (ONGC).SAED is not applicable to entities whose annual crude oil production is less than 2 million barrels in the previous financial year.
However, as product prices are on the rise and also to ensure better diesel availability, the Ministry has hiked the levy on diesel for export to Re 1 litre from Re 0.50 a litre earlier. Reliance Industries and Rosneft-backed Nayara Energy are primary exporters of fuel
India first imposed windfall profit taxes last July, joining a number of nations that tax super normal profits of energy companies. At that time, export duty of Rs 6 per litre ($12/bbl) was levied on petrol and ATF, and Rs 13 a litre ($26/bbl) on diesel. A Rs 23,250 per tonne ($40/bbl) windfall profit tax on domestic crude production was also levied.
Also read: Windfall tax: Will India impose it too?
The tax rates are reviewed every fortnight based on oil prices in the previous two weeks. The government levies a tax on windfall profits from oil producers on any price above a threshold of $75 per barrel. As per Finance Ministry, the data for Special Additional Excise Duty (SAED) on production of crude Oil is not maintained separately. The collection of SAED, for the current financial year, is estimated at the level of Rs 25,000 crore from production of crude oil, export of Petrol, Diesel and Aviation Turbine Fuel (ATF).