India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies
The seven-month-old windfall profit tax on domestically produced crude oil and export of fuel is likely to give about Rs 25,000 crore in the current fiscal ending March 31 and the levy will continue for now as international oil prices are up again, top government officials said.
"As of now, crude prices are again on the rise. So, for time being windfall tax will continue," CBIC chairman Vivek Johri told PTI here. Separately, Revenue Secretary Sanjay Malhotra said the budget has estimated collection from windfall tax at Rs 25,000 crore in the current fiscal. As the geopolitical situation continues to be volatile, Johri said it would be "difficult to predict how long the windfall taxes will continue".
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. Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.
The levy is reviewed every fortnight and rates are moderated based on international oil prices. The windfall tax on crude oil produced by companies, such as Oil and Natural Gas Corporation (ONGC), is currently Rs 1,900 per tonne. Crude oil pumped out of the ground and from below the seabed is refined and converted into fuel like petrol, diesel and aviation turbine fuel (ATF). The tax on the export of diesel is Rs 5 per litre and that on overseas shipments of ATF is Rs 3.5 a litre.
The export tax on petrol was scrapped in the very first review. The government levies tax on windfall profits made by oil producers on any price they get above a threshold of USD 75 per barrel. The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost. Johri said two rounds of excise duty cut on petrol and diesel to cool retail prices have led to a substantial drop in excise collection in the current 2022-23 fiscal year. "Because of the duty cuts, the RE is lower than BE." For the current fiscal, the revised estimates pegged excise mop up lower at Rs 3.20 lakh crore against Rs 3.35 lakh crore targeted in the Budget last year. For 2023-24, the collection has been pegged at Rs 3.39 lakh crore