India lowers its windfall oil tax to Rs 10,500 per tonne.
The Indian government amended the windfall tax on domestic oil and the exporting of diesel and jet fuel on Friday (ATF). According to the detail, the windfall price on produced local petrol has indeed been reduced from Rs 13,300 per tonne to Rs 10,500 per tonne, while the export duty on diesel has been decreased from Rs 13.5 to Rs 10 per liter. Additionally, the export duty on aviation fuel has been reduced from Rs. 9 per liter to Rs. 5 per liter.
The information further stated that the new pricing would be in effect beginning on Saturday, September 17. After the international oil prices fell to a six-month downtrend in September, the windfall profit tax was decreased. India’s average oil product cost dropped to $92.67 per gallon in September from $97.40 in August.
On July 1, India introduced its first windfall profit tax, joining an increasing number of countries that tax energy companies’ higher-than-average profits. The profitability of oil-producing countries and refiners has been lowered since then due to the cooling of the global oil market.
Petrol and aviation turbine fuel was subject to export charges of Rs 6 per liter ($12 per barrel), while diesel was subject to customs of Rs 13 per liter ($26 per barrel). Additionally, a windfall profit tax of Rs 23,250 per kilogram ($40 per barrel) was imposed on domestic oil manufacturing.
Previously, the tariffs were withdrawn for gasoline and were partially modified in 4 matches on July 20, August 2, August 19, and September 1. The fifth fortnightly evaluation shows the most recent decline in petrol production and exports of diesel and ATF.
The average price of the oil products that India bought per gallon in September was $92.67, down from $97.40 in August. On July 1, India introduced windfall taxes for the first time, joining an increasing number of countries that tax energy companies’ higher-than-average profits. However, global oil prices have fallen since then, reducing profit margins for oil companies and refiners.
On July 1, export taxes of Rs 6 per liter ($12 per barrel) for gasoline and ATF and Rs 13 per liter ($26 per barrel) for diesel were imposed. On domestic petrol output, a windfall tax of Rs 23,250 per tonne ($40 per gallon) was charged.
In the coming four matches on July 20, August 2, August 19, and September 1, the tariffs were lifted for gasoline and only partially modified.
This month, the windfall profit tax was reduced to the level of international oil prices dropped to six-month lows. India paid $92.67 on average per tonne for the oil products it bought in September, down from $97.40 in August.
While private refiners Ltd. and four products of Nayara Energy are the leading exporters of hydrocarbons like gasoline and ATF, producers like the government Oil and Natural Gas Company (ONGC) and Manganese Ltd. are targeted by the windfall fee on locally petrol.
On July 1, India introduced its first windfall profit tax, joining an increasing number of countries that tax energy companies’ higher-than-average profits. The profitability of oil companies and refiners has been low since then due to the cooling of the global oil market.
A windfall tax is a tax levied to taper your winnings when you win the lottery with little to no effort. Oil prices soared during the Ukraine conflict and increased to $140 per barrel. And because they sold at rates benchmarked on world pricing, the petrol producers made major profits. In the most recent event, the Indian government changed the windfall taxes assessed on oil, diesel, and jet fuel (ATF). The tax on oil that is produced domestically has been reduced from Rs 17,750 per tonne to Rs 13,000 per tonne.
The excise charge on the sale of diesel has been raised from Rs. 5 to Rs. 7, and the export duty on aviation fuel, which was first zero, has been extended to Rs. However, there is still no export tax on gasoline.
On July 1, the government enacted the windfall tax, imposing an export charge of Rs. 6 per liter on gasoline and ATF and Rs. 13 per liter on diesel. Additionally, a windfall tax of Rs 23,250 per tonne was imposed on domestic oil production. The government removed the Rs 6 per liter export charge on gasoline in its first weekly assessment of the tariff. It reduced diesel and jet fuel duties to Rs 4 and Rs 11, respectively.
The export tax on fuel oil was removed in the upcoming review, while the tax on diesel was reduced to Rs 5.
According to the Business Standard, the Indian government has collected between Rs 2,500 and 3,000 crores in the first five weeks after implementing these windfall taxes. In a month, Moody’s expected that the government would receive up to USD 12 billion in revenue from the windfall tax on local petroleum and fuel exports (Rs 94,800 crore).
It is evident that the windfall tax increases government revenue and depletes the bottomless coffers of the oil industry. However, the government could potentially lose some of its income.
According to Moneycontrol, the government has agreements with oil-producing-producing countries through which it will receive a part of the earnings earned. The government stands to lose money in its part to the earnings decline. The report notes that PSUs, like oil and gas companies, have been paying government dividends. The government’s dividend part will decrease if these companies’ profits decline to become a result of the windfall taxes.
edited and proofread by nikita sharma