Finance Ministry, late on Thursday, lowered the windfall gain tax on domestically produced petroleum crude. However, export levy on diesel has been raised and resumed on jet fuel (Aviation Turbine Fuel).
This is the third revision after export levies were imposed on July 1. The revision is done fortnightly and the revised levies has been made effective from August 19.
According to notifications issued by the Central Board of Indirect Taxes & Custom (CBIC), the windfall gain tax on petroleum crude produced domestically will now be ₹13,000 as against ₹17,750 per tonne. Initially, it was ₹23,250 per tonne, which was cut to ₹17,000 per tonne on July 18 and then rose to ₹17,750. One of the reasons for cutting the windfall gain tax could be fall in the crude prices.
The decision to impose the windfall gain tax followed the sharp rise in the crude prices in recent months. The domestic crude producers sell to refineries at international parity prices thereby, making windfall gains. Considering this, a cess was imposed. Imported crude was not subject to this cess.
The government has already clarified that this cess will have no adverse impact on the pump prices. Further, small producers, whose annual production of crude in the preceding financial year was less than 2 million barrels, are exempt from the cess. Also, to incentivise additional production over the preceding year, no cess has been imposed on the quantity of crude produced in excess of last year’s output.
Export of diesel and Jet Fuel
The notification said that export levies on diesel have been raised from ₹5 per litre to ₹7 a litre, and on ATF from NIL to ₹2 per litre. On the export of petrol, the NIL duty has been continued.
On the export levy on diesel, the Ministry’s reasoning was that with crude oil becoming costlier, prices of diesel, petrol, and ATF have increased sharply. Thus, exporting these products at high global prices became so remunerative that some refiners dried out their pumps in the domestic market. The cess was imposed to curb exports and to keep the domestic