Auto fuel exporters like Reliance Industries will gain as the government limited the windfall tax on such shipments to just a Rs 5/litre levy on diesel in its second review of these taxes introduced on July 1, taking into consideration the fall in their refining spreads.
However, it raised the new additional excise duty (cess) on petroleum crude marginally from Rs 17,000 to Rs 17,750 per tonne, as the trade parity prices followed by domestic oil producers like ONGC and OIL rose marginally since mid-July, in line with the global crude prices.
On July 20, the government had cut the cess on domestically produced crude by 27% and removed a Rs 6/litre tax on overseas shipment of petrol, as global crude prices moved to a lower ‘band’ and refining spreads of domestic fuel companies declined. It had also lowered windfall taxes on exports of diesel and aviation turbine fuel (ATF) by Rs 2/litre each to Rs 11 and Rs 4, respectively. It had also exempted SEZ exports from the windfall taxes.
The tax on ATF has now been removed.
“Refining spreads have come down and hence the change in export taxes,” revenue secretary Tarun Bajaj told FE.
The taxes will move either way depending on crude prices and crack spread. Crack margins refer to the difference between the purchase price of crude oil and the selling price of finished products, such as diesel, that a refinery produces from the crude oil. While crude prices have been stable with Brent at around $100-103/barrel, cracks have declined.