The Finance Ministry has raised the windfall profit tax levied on domestically-produced crude oil but lowered it on the diesel exports and ATF, in line with international oil prices. Also, it has removed the road and infrastructure cess on diesel marked for exports.
Effective March 04, the levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been raised to ₹4,400 from ₹4,350 per tonne, a notification issued by the Central Board of Indirect Taxes & Customs (CBIC) said. However, the Ministry has lowered the tax on exports of diesel to 50 paise per litre from ₹1 a litre and the same on overseas shipments of ATF to NIL from ₹1.50 a litre. The road and infrastructure cess on diesel marked for export has been brought down to NIL from ₹1.50 a litre.
Crude oil pumped out of the ground and below the seabed is refined and converted into petrol, diesel and aviation turbine fuel (ATF).
Read also: Govt likely to earn ₹43,000 cr in FY23 from windfall tax on crude oil, petroleum products
India first imposed windfall profit taxes on July 1 last, joining a growing number of nations that tax super normal profits of energy companies. At that time, export duties of ₹6 per litre ($12 per barrel) each were levied on petrol and ATF and ₹13 a litre ($26 a barrel) on diesel. A ₹23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.
The export tax on petrol was scrapped in the very first review. The tax rates are reviewed every fortnight based on the average oil prices in the previous two weeks. In response to a question in Rajya Sabha recently, Minister of State in Oil Ministry Rameswar Teli said: “As per Department of Revenue, Ministry of Finance, the data for Special Additional Excise Duty (SAED) on production of crude Oil is not maintained separately. The collection of SAED, for the current financial year, is estimated at the level of ₹25,000 crore from production of crude oil, export of petrol, diesel and ATF.”
Reliance Industries, which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in the country. The government levies a tax on windfall profits from oil producers on any price above a threshold of $75 per barrel. The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost.