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Windfall Profit Tax On Crude Oil Up, Levy On Export Of Diesel Down

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The government reduced the rate on export of diesel to Rs 10.5 per litre with that from Rs 13 per litre in its fortnight windfall tax revision. Meanwhile, the windfall profit tax is calculated by deducting any price that producers are gets above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn from overseas shipments

The government increased windfall tax on domestically produced crude oil however reduced the rate on export of diesel, on 16 November.

The crude oil produced by firms like state-owned Oil and Natural Gas Corporation (ONGC)witnessed a tax hike on to Rs 10,200 per tonne, from Rs 9,500 per tonne, effective from 17 November, said a government notification.

The government reduced the rate on export of diesel to Rs 10.5 per litre with that from Rs 13 per litre in its fortnight windfall tax revision. It includes the levy on diesel with Rs 1.50 per litre road infrastructure cess.

The export tax on jet fuel or Aviation Turbine Fuel (ATF) was set at Rs 5 a litre during the last review on 1 November 1. It has not been altered yet.

Initially when the levy was introduced, a windfall tax on export of petrol with diesel and ATF too was levied. However, the tax on petrol was scrapped in subsequent fortnightly reviews.

Meanwhile, the windfall profit tax is calculated by deducting any price that producers are gets above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn from overseas shipments. Such margins are primarily a difference of international oil price realised and the cost.

The first levy of windfall profit taxes was on 1 July, joining a growing number of nations that tax super normal profits of energy companies. During that time, the export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and aviation turbine fuel and Rs 13 a litre (USD 26 a barrel) on diesel. A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.

The duties were partially adjusted in the previous rounds on 20 July, 2 August, 19 August, 1 September, 16 September, 1 October, 16 October and 1 November.

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Centre Decreases Windfall Tax On Crude Oil

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The Centre has gone in for a cut in the windfall tax on the sale of locally produced crude oil at a time when global oil prices have largely remained flat at around USD 95 per barrel

The Centre on Tuesday reduced the windfall tax on crude oil to Rs 9,500 a tonne from Rs 11,000 earlier. The change is effective from 2 November, a government notification read. The Centre also raised the special additional excise duty on the export of aviation turbine fuel from Rs 3.5 per litre to Rs 5 per litre. 

 The special additional excise duty on the export of diesel has also been increased from Rs 12 per litre to Rs 13 per litre. The windfall tax is aimed at absorbing the super profits earned by domestic crude oil producers. This windfall tax is revised on a fortnightly basis. The Centre has gone in for a cut in the windfall tax on the sale of locally produced crude oil at a time when global oil prices have largely remained flat at around USD 95 per barrel.

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Crude Oil Prices Rise To Rs 6,727

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The contract for delivery in October rose by Rs 27, or 0.4 per cent, to Rs 6,727 per barrel. It had a business of 6,085 lots. Market analysts said raising of positions by participants led to the rise in crude oil futures

Traders increased their positions on firm spot demand, which led to a rise in crude oil prices in futures trade on Friday. Crude oil prices rose by Rs 27 to Rs 6,727 per barrel. On the Multi Commodity Exchange, there was a jump in the price of crude oil contracts for delivery in October.

The contract for delivery in October rose by Rs 27, or 0.4 per cent, to Rs 6,727 per barrel. It had a business of 6,085 lots. Market analysts said raising of positions by participants led to the rise in crude oil futures.

Globally, West Texas Intermediate crude oil was trading 0.84 percent higher at USD 81.91 per barrel in New York. While the price of brent crude oil rose 0.73 per cent to USD 89.14 per barrel.

There was no change in the prices of petrol and diesel in India for a long time, but due to rise in crude oil prices, petrol and diesel would also increase.

rupee

US Dollars, Indian Rupee To Trade In 79-81 Range In Near Term: Report

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The bank in a report said that the Indian rupee opened last week on a positive footing led by softness in the US dollar ahead of the CPI inflation and weaker crude oil prices

The Kotak Mahindra Bank on Monday said that US dollars and the Indian rupee will trade between the 79 to 81 range in the near term as markets continue to reassess the impact of slowing demand and elevated inflation.

The bank in a report said that the Indian rupee opened last week on a positive footing led by softness in the US dollar ahead of the CPI inflation and weaker crude oil prices. 

However, higher than expected US CPI inflation reading prompted a resurgence in the greenback as markets reversed the probability of a softer stance by the Federal Open Market Committee (FOMC). 

The emerging market currencies further came under pressure amidst risk-off as International Monetary Fund (IMF) and World Bank flagged an increasing risk of recession causing a sharp global equity sell-off. 

“Following recent trends, RBI’s intervention seemed to have again capped the fall of Indian rupee to above 80 levels. The Indian rupee closed the week 0.2 per cent weaker at 79.75,” the report stated 

In July, the RBI purchased USD 19.7 billion and sold USD 38.8 billion in spot FX markets amounting to a net dollar sale of USD 19 billion. 

RBI’s net long forward position was at USD 22 billion in July with a net short position of USD 11.9 billion in the up to the one-month bucket and net long positions of USD 10.3 billion in 1-3 months bucket, USD 13.5 billion in the 3-12 months bucket, and USD 10.1 bn in the more than 1-year bucket.

Additionally, FX reserves for the week ending September 9 fell by USD 2.2 billion to USD 550.9 billion. Till date in FY2023, FX reserves have fallen by USD 55.6 billion, as per the bank.

rupee

Indian Rupee Settles 10 Paise Down At 79.94 Against US Dollar

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The nearby unit at last settled at 79.94 a dollar, down 10 paise over its past close of 79.84

In the wake of hitting all-time low, the Indian rupee recuperated a portion of its losses to settle 10 paise down at 79.94 against the US dollar on Monday, following the strength of the American currency and firm crude oil rates. At the interbank foreign exchange market, the local currency opened at 80.10 and tumbled to its low of 80.15 against the US dollar in intra-day exchange.

The nearby unit at last settled at 79.94 a dollar, down 10 paise over its past close of 79.84. On July 20, the rupee interestingly shut beneath the 80-mark at 80.05 against the American money. In the mean time, the dollar record, which measures the greenback’s solidarity against a crate of six monetary standards, was exchanging 0.28 per cent higher at 109.10, after Federal Reserve Chair Jerome Powell embraced a hawkish tone to fight expansion. Global markets fell forcefully by more than 2 per cent in the midst of a hawkish discourse by US Fed Chair Jerome Powell. Brent crude futures, the worldwide oil benchmark, rose by 0.64 per cent to USD 101.64 per barrel.

rupee

Rupee Settles Flat At 79.78 Against US Dollar

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At the interbank forex market, the local unit opened at 79.73 against the greenback and finally settled at 79.78 (provisional), unchanged from its previous close

The rupee pared its initial gains to settle flat on Tuesday amid muted domestic equities, firming crude oil prices and concerns over the hawkish US Fed. At the interbank forex market, the local unit opened at 79.73 against the greenback and finally settled at 79.78 (provisional), unchanged from its previous close. During the day the local unit witnessed an intra-day high of 79.72 and a low of 79.81 against the American currency. On Monday, the rupee rose by 12 paise to close at 79.78 against the US dollar.

According to Dilip Parmar, Research Analyst, HDFC Securities, forex markets registered a wait-and-see approach ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting, which could favour a lower volatility environment in dollar-crosses. Moreover, weaker domestic equities and higher crude oil prices also weighed on the domestic unit. ”Dollar traders are cautious as the market is eager to see if the softer economic data has changed the Fed’s hawkish rate path. Traders are giving renewed attention to energy prices after Russia once again reduced the flow of piped gas to Germany,” Parmar said, adding that Spot USD/INR is expected to trade in the range of 79.30 to 80.10.

The dollar index, which measures the greenback’s strength against a basket of six currencies, was up 0.31 per cent at 106.81. Brent crude futures, the global oil benchmark, rose 1.71 per cent to USD 106.95 per barrel. On the domestic equity market front, the BSE Sensex ended 497.73 points or 0.89 per cent lower at 55,268.49, while the broader NSE Nifty declined 147.15 points or 0.88 per cent to 16,483.85. Foreign institutional investors remained net sellers in the capital market on Monday, offloading shares worth Rs 844.78 crore, as per exchange data.

(PTI)

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Government Cuts Windfall Tax On Fuel Export, Domestic Crude Oil

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While the Rs 6 a litre export duty on petrol was scrapped, the tax on the export of diesel and jet fuel (ATF) was cut by Rs 2 per litre each to Rs 11 and Rs 4 respectively, government notifications showed

The government on Wednesday scrapped a three-week-old tax on the export of petrol and cut windfall taxes on overseas shipments of diesel and ATF as well as on domestically produced crude oil after global oil prices fell. While the Rs 6 a litre export duty on petrol was scrapped, the tax on the export of diesel and jet fuel (ATF) was cut by Rs 2 per litre each to Rs 11 and Rs 4 respectively, government notifications showed.

The tax on domestically produced crude was also cut to Rs 17,000 per tonne from Rs 23,250, a move that will benefit state-owned Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd. Also, correcting the anomaly that crept in when the windfall taxes were slapped on July 1, the government exempted fuel exports from refineries located in export-focused zones from the levies.

The move will benefit Reliance Industries whose exports had become uncompetitive due to the export levies that were as high as USD 26 per barrel. Reliance was up 2.7 per cent to trade at Rs 2,507.15 on the BSE at noon. ONGC stocks also rose 4.63 per cent to Rs 133.35, while Vedanta was up 8.36 per cent at Rs 258.55. On July 13, PTI had reported that the windfall tax review was expected following a sharp fall in global oil prices.

India imposed windfall taxes on July 1, joining a growing number of nations that taxes super normal profits of energy companies. But international oil prices have cooled since then, eroding profit margins at both oil producers and refiners. While international crude prices slumped on concerns of a potential global recession, cracks or margins on diesel, petrol and ATF crashed.

The July 1, export duties of Rs 6 per litre on petrol and ATF translated into USD 12 per barrel, while Rs 13 a litre tax on diesel was equivalent to USD 26 a barrel. The Rs 23,250 per tonne windfall tax on domestic crude production equalled USD 40 per barrel. Post windfall tax, the realised spread on diesel and petrol fell to near loss-making levels while the realisation on aviation fuel (ATF) and crude had also gone below 15-year averages.

The realised spread on petrol after considering USD 12 per barrel windfall tax was near a loss-making level of just USD 2 per barrel. Similarly, the diesel spread too was a meagre sum after considering the USD 26 per barrel export tax. For oil producers, the windfall levy took away 40 per cent of their earnings. On top of it, they also paid royalty and cess. The cut in windfall tax will benefit Reliance, which operates two oil refineries at Jamnagar in Gujarat with one focused only on exports.

At the time of imposing the windfall tax, the government had stated that the objective behind the move was to shore up domestic supplies as refiners were preferring to export than to meet the local requirements. But an export levy on only-for-export refineries did not make sense as those units aren’t meant to supply fuel to the domestic market. And that anomaly has now been corrected. State-owned ONGC and Oil India Ltd as well as private sector Vedanta Ltd, who account for almost all of the crude oil produced in the country, will benefit from the cut in windfall tax.

Besides Reliance, Russia’s Rosneft-backed Nayara Energy, which operates a 20 million tonnes a year refinery at Vadinar in Gujarat, will also benefit from the cut in the export levy. The refining spread for diesel almost halved from the USD 55-60 per barrel peak seen in June to USD 30 a barrel. Similarly, ATF spreads crashed from USD 50-55 per barrel to USD 25-30. Gasoline spreads have also been slashed from USD 30-35 per barrel last month to USD 10-15.

At the same time, the Brent crude price has also cooled off by USD 15-20 per barrel in the past 2-3 weeks to about USD 100 per barrel. When the taxes were introduced, it was estimated that they would bring over Rs 1 lakh crore additional revenue in the full year. The windfall tax on crude production alone was estimated to generate revenue of Rs 65,600 crore and tax on export products another Rs 52,700 crore if they were to be continued for the full year.

rupee

Indian Rupee Hits Record Low Of 79.15 Per Dollar

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Data late on Monday showed India’s June trade deficit widened to a record USD 25.63 billion, pushed by a rise in crude oil and coal imports, from USD 9.61 billion a year ago

The Indian rupee weakened further in afternoon trade on Tuesday to touch a fresh record low against the U.S. dollar as concerns of a wider current account deficit came to the forefront after the country’s June trade deficit hit a record high. Data late on Monday showed India’s June trade deficit widened to a record USD 25.63 billion, pushed by a rise in crude oil and coal imports, from USD 9.61 billion a year ago. The partially convertible rupee was trading at 79.13/14 per dollar by 0822 GMT, after hitting a life low of 79.15. It had touched the previous record low of 79.12 last week and had closed trading at 78.95 on Monday.

(Reuters)

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Petrol-Diesel Prices Hike Again

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The price of petrol has gone up to Rs 254 per liter and that of diesel to Rs 214 per liter.

Indian Oil Corporation’s (IOC) subsidiary has increased the retail prices of petrol and diesel. The economic condition of the neighboring country Sri Lanka is continuously deteriorating. In this sequence, now the price of petrol and diesel has increased once again here. The price of petrol has gone up to Rs 254 per liter and that of diesel to Rs 214 per liter. This is the third increase in a month.

Due to the Russia-Ukraine war, Western countries are imposing sanctions on Russia, due to which the prices of oil and gas are also increasing. The price of crude oil is also continuously moving towards new records. International crude oil price has reached USD 139 per barrel. Not only this, the Sri Lankan rupee has also declined by Rs 57 against the US dollar. The oil company has said that there is no other option but to increase the prices. Even after this, there is a possibility of huge losses to go forward.

The economic crisis in Sri Lanka is increasing. Actually Sri Lanka is going through the most severe economic phase in its history. Sri Lanka’s foreign exchange is only USD 2.31 billion and therefore it is also facing problems in paying for essentials. Due to the rising price of crude oil, the difficulties of the Government of Sri Lanka seem to be increasing.

With the rising price of petrol and diesel in the neighboring country, the prices of petrol and diesel in India are also expected to increase. However, the oil companies here have not made any change in the prices of petrol from November 3. But since then, crude oil has increased by more than USD 33 a barrel, and elections for five states are also over now. In such a situation, the price of petrol and diesel may increase by 20 to 25 rupees in the coming days making it much more expensive.

rupee

Rupee Slumps 81 Paise To 76.98

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The rupee declined 81 paise to 76.98 against the US dollar in opening trade on Monday as intensifying geopolitical risks due to the Russia-Ukraine conflict pushed investors to the safe-haven appeal of the greenback. Forex traders said escalating tensions between Russia and Ukraine kept crude oil prices at an elevated level and heightened worries about domestic inflation and wider trade deficits.

Besides, sustained foreign fund outflows and a lacklustre trend in domestic equities also weighed on investor sentiment. At the interbank foreign exchange, the rupee opened at 76.85 against the US dollar, then slipped further to 76.98, registering a decline of 81 paise from the last close. On Friday, the rupee fell by 23 paise to close at 76.17 against the US dollar, the lowest closing level since December 15, 2021. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.29 per cent to 98.93.

Meanwhile, global oil benchmark Brent crude futures jumped 9.38 per cent to USD 129.19 per barrel. The Indian Rupee started weak this Monday morning as the dollar spiked along with crude oil this morning, said Sriram Iyer, senior research analyst at Reliance Securities. Iyer added that the Reserve Bank of India (RBI) could be present to curb volatility. The US dollar and the yen are trading stronger this Monday morning in Asian trade as investors moved towards the safe-haven assets, Iyer noted.

On the domestic equity market front, the 30-share Sensex was trading 1,682.92 points or 3.10 per cent lower at 52,650.89, while the broader NSE Nifty slipped 459.95 points, or 2.83 per cent, to 15,785.40. Foreign institutional investors remained net sellers in the capital market on Friday as they offloaded shares worth Rs 7,631.02 crore, according to stock exchange data.

PTI

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