With global oil prices falling, the Centre on Thursday significantly reduced the windfall tax on locally produced crude oil and diesel exports.
In a notification, the finance ministry said the windfall tax on locally produced crude oil has been cut to Rs 4,900 per tonne from Rs10,200 per tonne. Separately, it also reduced the windfall tax on high-speed diesel for exports to Rs 8 per litre from Rs 10.5 per litre. This includes a cess of Rs 1.5 per litre.
The changes will be effective from December 2, it said. According to PPAC data, the Indian basket of crude oil averaged $87.55 per barrel in November, down from $91.7 per barrel in October.
Since July 1, the government had imposed special additional excise duties of Rs 13 per litre on diesel exports, and `6 per litre each on petrol and aviation turbine fuel exports. It had also imposed a special additional excise duty of Rs 23,250 per tonne on domestic crude oil production. No windfall tax is applicable on exports from special economic zones.
The objective was to tax the super-normal profits being made by domestic producers of crude petroleum when international prices rose.
The government had also announced a mechanism of fortnightly review and 10 such reviews have taken place. In the first review on July 20, the Centre had removed the export tax on petrol.
The previous review was done on November 16 when the windfall tax on domestically-produced crude oil was raised to Rs 10,200 per tonne and the special additional excise duty on the export of diesel was cut to `10.5 per litre.