Centre reduces windfall tax on crude petroleum by over 35%
Indian government has slashed the windfall tax on crude petroleum by over 35.71%, lowering it from Rs. 9,800 per ton to Rs. 6,300 per ton. Moreover, the special additional excise duty (SAED) on diesel has been reduced by 50%, now at Re. 1 per liter instead of Rs. 2 per liter. These adjustments were made during the biweekly review in response to fluctuating global oil prices, attributed to increased US supply and concerns over reduced energy demand in Asia.
Windfall tax on aviation turbine fuel and petrol remains unchanged
The windfall tax on aviation turbine fuel and petrol continues to be zero. In the previous biweekly review on October 31, the government had raised the windfall tax on crude petroleum to Rs. 9,800 per ton from Rs. 9,050 per ton, effective November 1. India first implemented windfall profit taxes on July 1 of last year, joining other countries that tax the extraordinary profits of energy companies.
Tax rates are reviewed every fortnight
Windfall tax rates undergo a review every two weeks, based on average oil prices during the preceding fortnight. A windfall tax is imposed on domestic crude oil if global benchmark rates exceed $75 per barrel. Diesel, aviation turbine fuel, and petrol exports are subject to the levy if product cracks (or margins) surpass $20 per barrel. Product cracks or margins indicate the difference between crude oil (raw material) and finished petroleum products.
Oil prices continue to fall
On November 16, oil prices experienced a drop, continuing the downward trend from the previous session, as indications of increased supply from the US coincided with concerns about weak energy demand from China. Brent futures fell by 0.58% to $80.71 a barrel, while US West Texas Intermediate crude (WTI) shed 0.61%, reaching $76.19 a barrel, at the time of writing. Both benchmarks saw a decline of over 1.5% in the previous session.
