As the month of December commenced, the Indian government took a step to lower the windfall gains tax on crude oil, revising it from Rs 6,300 per tonne to Rs 5,000 per tonne. This adjustment followed the last fortnightly review on November 16, during which the government had already reduced the windfall tax on crude petroleum from Rs 9,800 per tonne to Rs 6,300 per tonne.
The windfall tax undergoes bi-weekly revisions, contingent on the fluctuations in international crude and product prices.
Earlier, the windfall tax on crude oil was reduced from Rs 9,800 per tonne to Rs 6,300 per tonne, equivalent to $75.70. Whereas the tax on diesel saw a 50 per cent reduction, decreasing from Rs 2 per litre to Rs 1 per litre. The levy on the export of jet fuel and petrol remained unaltered, remaining at zero.
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In July of the preceding year, India introduced a windfall tax on crude oil producers and prolonged the imposition on the export of gasoline, diesel, and aviation fuel. This decision was prompted by private refiners seeking to capitalize on strong refining margins in international markets rather than selling domestically.
A windfall tax is applied to domestic crude oil when global benchmark rates surpass USD 75 per barrel. Additionally, the export of diesel, aviation turbine fuel (ATF), and petrol incurs this levy when product margins exceed USD 20 per barrel, serving as a mechanism to address price fluctuations and maintain economic stability.
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