The government on Tuesday cut the windfall profit tax on domestic crude but raised the levy on the export of diesel and aviation turbine fuel, in line with international oil prices.
The tax on domestic crude has been reduced to Rs 9,500 per tonne from Rs 11,000 per tonne in the eighth fortnightly review, a Ministry of Finance notification said.
While the tax on diesel export has been raised to Rs 13 per litre (Rs 11.5 plus an additional Rs 1.50 per litre road and infrastructure cess) from Rs 12 earlier, the levy on the export of jet fuel, or ATF, has been raised to Rs 5 a litre from Rs 3.5 in the previous fortnight.
The new rates are effective Nov. 2.
Brent crude has fallen from the highs of $140 in March to $88 a barrel on Nov. 1. The levy is aimed at taxing windfall gains on export of refined products and sale of crude oil in the domestic market amid high global prices. The government reviews the tax every fortnight.
An increase in windfall tax on diesel and ATF will impact Reliance Industries Ltd. and Nayara Energy Ltd., the two private refiners that export these products. At the same time, Oil and Natural Gas Corp. and Vedanta Ltd.’s Cairn Oil and Gas will benefit from a reduced windfall tax on domestic crude.
According to Petroleum Planning and Analysis Cell data, the basket of crude oil that India buys has averaged around $85 a barrel in the second half of October, compared with $84 in the previous fortnight.
India first imposed windfall profit taxes on July 1 to tax profits of oil companies as prices surged. An export duty of Rs 6 a litre was levied on petrol and aviation turbine fuel, and Rs 13 a litre on diesel. A windfall profit tax of Rs 23,250 per tonne was also imposed on domestic crude.
However, crude prices have settled since then, bringing down the profit margins of both producers and refiners. Accordingly, the duties have been adjusted in the last seven rounds.
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