The Union government has reduced the windfall tax on locally manufactured crude oil to Rs 2,100 per tonne compared to Rs 4,600 per tonne. The windfall tax on diesel and ATF exports has been set at none.
Every two weeks, the windfall tax is adjusted to reflect changes in worldwide crude and product prices. Governments levy a windfall tax when an industry suddenly generates huge profits, typically as a result of an exceptional incident. Crude oil prices have fallen below $80 per barrel due to concerns about demand from China, the world’s largest oil consumer, and easing tensions in the Middle East.
Earlier on July 31, the special additional excise duty (SAED) or windfall tax on crude oil was reduced by 34.3 percent to Rs 4,600 per tonne from Rs 7,000, while the rate on diesel and ATF remained constant at zero. In July 2022, the Indian government implemented a windfall tax on crude oil producers. Later, this tax was expanded to cover petrol, diesel and aviation turbine fuel (ATF) exports. The fundamental goal of this strategy is to dissuade private refiners from selling these fuels abroad at higher global prices, instead focussing on domestic market supply.