Government cuts windfall tax on crude petroleum to ₹5,000/tonne, jet fuel price also down

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windfall tax on crude petroleum and jet fuel by ₹1,300 per tonne, effective from December 1, as per a Moneycontrol report. The tax on crude petroleum has been reduced from ₹6,300/tonne to ₹5,000/tonne, while the levy on jet fuel has been adjusted to ₹1.06 lakh per kilo litre (kL) from the previous ₹1.11 lakh/kL, it added During the previous review on November 16, the government slashed the windfall tax on crude petroleum by ₹3,500 from ₹9,800 per tonne to ₹6,300 per tonne. This was in line with the downward trend in global oil prices.

Before this, on November 1, the government raised the tax on crude oil from ₹9,050 per tonne to ₹9,800 per tonne. Subsequently, the duty on diesel exports was reduced by half to ₹2/litre, while the levy on jet fuel was eliminated, bringing it down from Re 1/litre to nil. Due to a decline in international oil prices since the last adjustment, there has been a necessity for a reduction.

The windfall tax undergoes fortnightly revisions, contingent upon the fluctuations in international crude and product prices. Presently, crude oil prices are trading at approximately $82 per barrel. India initially introduced the windfall tax in July 2022 in response to the escalating price of crude oil.

This tax is imposed by governments when an industry unexpectedly generates substantial profits, typically attributed to an unprecedented event. A windfall tax is imposed on domestically produced crude oil when the rates of the global benchmark exceed $75 per barrel. For the export of diesel, aviation turbine fuel (ATF), and petrol, the levy is applicable when the product cracks, or margins, surpass $20 per barrel.