New Delhi: In the wake of softening of the prices of petroleum products in the international market, the Modi-led government on Tuesday evening took a major step, cutting windfall taxes on diesel and ATF (jet fuel) and raising duties on domestically produced crude oil. The new changes will come to effect from today.
No tax on export of ATF and petrol: The tax on export of diesel has been reduced from Rs 11 to Rs 5 per liter, but it has been decided to do away with it on ATF. Similarly, zero tax on the export of petrol will continue. As per the notification, the tax on domestically produced crude oil has been increased from Rs 17,000 per tonne to Rs 17,750 per tonne. The move could affect producers like ONGC and Vedanta Ltd.
Unexpected profit tax was imposed for the first time on July 1: India had imposed windfall profit tax for the first time on July 1. With this, India became one of the countries that tax the profits of energy companies. However, since then, oil prices in the international market have started falling, reducing profits for both oil producers and refineries.
Explain that on July 1, an export duty of 6 per liter ($12 a barrel) was imposed on petrol and ATF and a tax of 13 rupees per liter ($26 a barrel) was imposed on the export of diesel. At the same time, an unexpected tax of Rs 23,250 per tonne ($ 40 per barrel) was imposed on domestic crude oil production.
After this, during the review of the first fortnight on July 20, the three-week old tax imposed on petrol exports was abolished. Along with this, windfall tax applicable on export of diesel and aviation fuel and domestic production of crude oil was also cut. The tax on export of diesel and aviation fuel was cut by Rs 2 and Rs 4 per liter, respectively. The tax on domestically produced crude was also reduced from Rs 23,250 to Rs 17,000 per tonne.
Now, after the fall in crude oil prices, margins of refinery companies have come down after which export tax on diesel and ATF has been cut. But the duty on domestically produced crude has been increased in line with the marginal increase in international crude oil prices