The government has hiked the windfall tax on locally produced crude oil and on export of diesel and aviation turbine fuel. In the latest fortnightly review, the windfall tax on domestically produced crude oil has been cut to Rs 1,900 per tonne from Rs 2,100 per tonne.
This is the second lowest level since the tax was introduced in July 2022. The windfall tax on domestically produced crude oil was at its lowest level at Rs 1,700 per tonne in the second fortnight of December 2022.
The windfall tax on export of ATF has been lowered to Rs 3.5 per litre from Rs 4.5 per litre that was prevailing in the last fortnight.
The government has also cut the tax on export of diesel to Rs 5 per litre (inclusive of cess) from Rs 6.5 per litre previously.
The new rates are effective from Tuesday, said the notification by the Central Board of Indirect Taxes and Customs.
According to PPAC data, the crude oil price of the Indian basket was at $ 82.1 per barrel on January 16 while the average price of the Indian basket in January has been at $78.58 per barrel against $78.1 per barrel in December. The windfall taxes are reviewed in sync with the global crude oil prices. In its previous fortnightly review on January 3, the government had hiked the taxes following a drop in global crude oil prices.
This is likely to be the last review of the taxes before the presentation of the Union Budget 2023-24 on February 1. The Centre is likely to raise about Rs 35,000-40,000 crore from the tax. Analysts expect the tax on the huge gains by domestic crude oil producers amidst high global prices is likely to continue into the next fiscal as well.
The Centre had imposed special additional excise duty of Rs 23,250/tonne on crude and export taxes on petrol, diesel and ATF at Rs 6/litre, Rs 13/litre and Rs 6/litre, respectively from July 1, 2022. It subsequently removed the tax on petrol. The rates are reviewed every fortnight to keep them in sync with the global crude oil prices.