Oil producers jump after govt cuts windfall profit tax cut on domestic crude oil

Shares of three oil explorers rose by 0.68% to 5.36% after the Central Government on Sunday (2 October 2022) slashed the windfall tax on petrol, diesel, jet fuel and crude oil following a decline in international rates.

Oil and Natural Gas Corporation (ONGC) (up 5.36%), Oil India (up 2.61%) and Reliance Industries (up 0.68%) climbed.

Meanwhile, the Nifty 50 index was down 0.53% to 17,003.65. The Nifty Oil & Gas index was up 0.88% to 7,711.25.

Effective Sunday, the government cut the windfall tax on domestically-produced crude oil by about 24% to Rs 8,000 per tonne from Rs 10,500, according to a government notification. The government also halved the levy on export of diesel to Rs 5 per litre. It also scraped a levy of Rs 5 per litre on export of jet fuel, at the sixth fortnightly review of the one-off taxes on oil companies.

 

On 1 July, the Ministry of Finance imposed a cess of Rs 23,250 per tonne (by way of special additional excise duty - SAED) on crude oil produced domestically. It also slapped a Rs 6 per litre tax on the export of petrol and jet fuel (ATF) and Rs 13 a litre on the export of diesel effective 1 July 2022.

With this, India joined a select league of nations globally that have taxed windfall gains accruing to oil companies from soaring energy prices.

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