New Delhi: The government has hiked the windfall profit tax on the export of diesel to Rupee one per litre while the levy on domestically produced crude oil has been cut by a fifth, according to an official order. The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been reduced to Rs 3,500 per tonne from Rs 4,400 per tonne, the order dated March 20 said.
Govt raises tax on export of diesel to Re 1 per litre
The government raised the tax on export of diesel to Re 1 per litre from Rs 0.50, and the same on overseas shipments of ATF remains at nil. The new tax rates come into effect from March 21, the order said. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
Background of imposing windfall taxes
India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre (USD 26 a barrel) on diesel. A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied. The export tax on petrol was scrapped in the very first review and that on ATF was done away with at the last review on March 4.
Reliance Industries Ltd, which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in the country.
The government levies the tax on windfall profits made by oil producers on any price they get above a threshold of USD 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.
News & Image Source : psuwatch.com
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