Finance & Stock Market
Govt raises windfall gains tax on crude oil, diesel
By - 16 Feb 2024 09:00 PM
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The government has revised its windfall gains tax on crude petroleum with effect from February 16. As per the revisions, Special Additional Excise Duty (SAED) on crude petroleum will increase to Rs 3,300/tonne, from Rs 3,200/tonne earlier; while tax on diesel will increase to Rs 1.50/litre from nil/litre. Further, SAED on petrol and aviation turbine fuel (ATF) will continue to be nil. Earlier this month, the government had hiked windfall tax on domestically produced crude oil to Rs 3,200 per tonne from Rs 1,700 per tonne. The tax is levied in the form of Special Additional Excise Duty (SAED). The government levies tax on windfall profits made by oil producers on any price they get above a threshold of $75 per barrel. The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost. India first imposed windfall profit taxes on July 1, 2022, joining a host of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre ($12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks. Crude oil pumped out of the ground and from below the seabed is refined and converted into fuel like petrol, diesel and ATF. A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above $20 per barrel. |
