Centre hikes windfall taxes on crude, ATF, diesel exports

Centre hikes windfall taxes on crude, ATF, diesel exports

The Centre has hiked the windfall tax on locally produced crude oil, aviation turbine fuel and export of diesel with effect from Tuesday.

The tax on locally produced crude oil has been hiked to Rs 2,100 per tonne from Rs 1,700 per tonne, according to a notification by the Central Board of Indirect Taxes and Customs.

In the latest fortnightly review, the government has also hiked the windfall tax on aviation turbine fuel to Rs 4.5 per litre from the earlier Rs 1.5 per litre. The windfall tax on high-speed diesel meant for exports has also been hiked to Rs 6.5 per litre from the previous Rs 5 per litre.

The hike in tax rates is in line with the recent firming up of global crude oil prices. In its previous fortnightly review on December 16, the government had slashed the taxes following a drop in global crude oil prices.

Crude oil price for the Indian basket was at Rs 79.38 per barrel as on December 30, 2022 while the average for December 2022 was $78.1 per barrel, according to PPAC data.

The Centre had imposed special additional excise duty of Rs 23,250/ tonne on crude and export taxes on petrol, diesel and ATF at Rs 6/ litre, Rs 13/ litre and Rs 6/ litre, respectively from July 1, 2022. It subsequently removed the tax on petrol.The rates are reviewed every fortnight to keep them in sync with the global crude oil prices.

Also Read: Reliance Industries shares rise 1.5%, ONGC gains 2% intraday as govt cuts windfall tax on crude oil

“Since the implementation of the windfall taxes had no fixed expiry, we had assumed that these would last only until December 2022. However, it looks unlikely that the government is going to unwind it any time sooner,” Motilal Oswal said in a recent company update on ONGC. It has kept its Brent forecast unchanged at $ 90 per barrel for the fiscal year 2023-24. The windfall levy on domestic crude is aimed at producers like state owned ONGC and Vedanta controlled Cairn. Private refiners Reliance Industries and Rosneft-backed Nayara Energy are the principal exporters of diesel and ATF.