Reliance Industries and ONGC share prices gained over 1.5% intraday as the government slashed windfall tax on diesel exports and locally produced crude oil on Thursday. Reliance Industries shares opened at Rs 2,571, gaining over 1.5% to touch an intraday high of Rs 2,618. ONGC touched a high of Rs 150.5, up 2% from yesterday’s close of Rs 147.45 on the NSE before giving up some of its gains to trade at Rs 148.
The windfall tax on domestic crude oil targets crude producers such as Vedanta and center-run ONGC, while Reliance Industries and Nayara Energy are private refiners who export diesel and ATF (Aviation Turbine Fuel).
This jump comes as the windfall tax on crude oil produced by firms like ONGC
Windfall tax has been revised by the government every fortnight since it was imposed. The latest revision sees the tax on domestically produced oil reduced by around 65%. India began to impose windfall taxes July 1 onwards, as more nations began to tax the super normal profits of energy companies, amid an energy crisis. The government further states that the tax was introduced as a result of the windfall gains that the crude refiners and producers made during a period of rising international crude prices.
Tarun Bajaj, Revenue Secretary believes that the reduction or dismissal of windfall tax will help boost the economy as crude prices will fall, thus prompting a reduction in the petrol and diesel rates as well. “To that extent, our import bill reduces, and our current account deficit improves. So if that happens, that is far, far better than the small amount of windfall taxes that will be collected through this process,” he said.