Centre to receive Rs 40,000 crore from windfall tax, half from private cos

The windfall taxes were imposed in July and will only be removed if the price of oil falls below $70-75 per barrel

Windfall taxes on the export of petroleum products and domestic crude oil will generate Rs 40,000 crore for the central government, according to a report in the Financial Express (FE). Half of the taxes will be paid by private sector companies. 

The taxes were imposed in July and will only be removed once the price of oil falls below $70-75 per barrel. The tax was not applicable to exports from special economic zones (SEZ). 

"There is no separate data yet as to how much has been collected so far through the special levies as these are subsumed in excise duty receipts. But, additional tax revenues could be in the range of Rs 30,000-40,000 crore in the current fiscal," an official told FE. 

On October 15, the Centre raised the windfall tax on domestic oil to Rs 11,000 per tonne. It was Rs 8,000 per tonne before the revision. 

While private refiners RIL and Rosneft-based Nayara Energy are the principal exporters of diesel and ATF, the windfall tax is primarily aimed at producers like state-owned ONGC and OIL, and Vedanta-controlled Cairn, according to FE.

In September, oil prices moderated to $90 per barrel. The prices were $116 per barrel in June. However, in October, the prices again rose marginally to $91.7 per barrel. The prices have shot up since the onset of the Russia-Ukraine war in February. In December 2021, the oil price was $73 per barrel. 

The government's move to introduce a windfall tax was aimed at addressing the shortfall in domestic fuel markets.