Centre reduces windfall tax on crude oil to Rs. 5,000/ton
The Centre today announced a decrease in the windfall tax on crude oil, lowering it from Rs. 6,300 per ton to Rs. 5,000 per ton. This tax rate is subject to review every two weeks, based on the average oil prices during the previous fortnight. This change follows a previous reduction on November 16, when the tax was cut from Rs. 9,800 per ton to Rs. 6,300 per ton.
Details of the Special Additional Excise Duty (SAED)
This windfall tax is applied as a Special Additional Excise Duty (SAED) on domestically produced crude oil. On October 31, the SAED was raised from Rs. 9,050 per ton to Rs. 9,800 per ton, effective November 1. In addition, the SAED on diesel exports was lowered from Rs. 4 per liter to Rs. 2 per liter. The government has reduced the windfall tax on domestically produced crude oil and diesel exports in line with the decrease in global oil prices.
Windfall tax and export duties background
India first implemented the windfall tax in July 2022, imposing export duties of Rs. 6 per liter ($12 per barrel) on both petrol and Aviation Turbine Fuel (ATF) and Rs. 13 per liter ($26 per barrel) on diesel. The windfall tax is applied to domestic crude oil when global benchmark rates exceed $75 per barrel. Diesel, ATF, and petrol exports are subject to the levy if product margins rise above $20 per barrel.
