The government has cut the windfall-profit tax levied on domestically produced crude oil while keeping the levy on exports of diesel unchanged at zero.
The levy on crude oil produced by companies such as Oil and Natural Gas Corporation Ltd. has been cut to Rs 4100 per tonne from Rs 6,400 per tonne in the previous fortnight, according to an official statement by the Ministry of Finance.
The new tax rates will take effect on May 2, it said.
In the previous fortnight, the government had reduced the tax on exports of diesel to zero from 50 paise per litre and increased the levy on crude production following the decision by the Organisation of Petroleum Exporting Countries to cut crude oil production by 1.16 million barrels per day, leading to a jump in crude prices globally beyond $85 per barrel. However, since then, the prices have eased to $79.31 per barrel.
Crude oil that is pumped out of the ground and from below the seabed by companies like ONGC, Oil India Ltd., and Cairn Oil & Gas Ltd. is refined and converted into fuels like petrol, diesel, and aviation turbine fuel by state and private refiners like Bharat Petroleum Corporation Ltd., Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd., and Reliance Industries Ltd.
The tax rates are reviewed every fortnight based on the average crude oil price. India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax the supernormal profits of energy companies. At that time, export duties of Rs 6 per litre, or $12 per barrel, were levied on petrol and ATF and Rs 13 per litre, or $26 per barrel, on diesel. A windfall profit tax of Rs 23,250 per tonne, or $40 per barrel, on domestic crude production was also levied. The export tax on petrol was scrapped in the very first review, and that on ATF was done away with on March 4.
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