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

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.