Govt cuts windfall tax on crude to Rs 5,000/tonne, on ATF to Rs 1.06 l/kL

The government has lowered the windfall tax on crude petroleum by Rs 1,300 to Rs 5,000 per tonne. The levy on jet fuel (ATF) has also been reduced to Rs 1.06 lakh per kilo litre (kL) from Rs 1.11 lakh/kL, according to media reports.

The Centre had earlier reduced the windfall tax on diesel and crude oil on November 16. The windfall tax on crude oil had been slashed to Rs 6,300 ($75.70) per tonne from Rs 9,800 a tonne, while for diesel, it was halved to Rs 1 per litre from Rs 2 per litre. The levy on the export of jet fuel and petrol was kept unchanged at zero.

In October, the Centre had raised the windfall tax on crude oil to Rs 9,800 ($117.70) per tonne from Rs 9,050 per tonne. The windfall tax on aviation turbine fuel, which had been Rs 1 per litre, was removed at the time.

Before that, on October 18, the Centre cut the windfall tax on crude oil to Rs 9,050 per tonne from Rs 12,100 per tonne.

India had imposed a windfall tax on crude oil producers in July last year and extended the levy on exports of gasoline, diesel and aviation fuel after private refiners wanted to make gains from robust refining margins in overseas markets instead of selling it locally.

At that time, export duties of Rs 6 per litre each were levied on petrol and ATF and Rs 13 a litre on diesel. A Rs 23,250 per tonne windfall profit tax on crude oil produced by companies such as OIL and Natural Gas Corporation (ONGC) was also levied.

A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above $20 per barrel.

The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.