Windfall TaxImage Credit source: File Photo
The government has reduced Windfall Tax on petroleum crude oil from Rs 4,100 per tonne to zero, giving great relief to oil companies from May 16. Now oil companies will not have to pay any windfall tax on crude oil. Explain that the windfall tax on petrol, diesel and aviation turbine fuel (ATF) was kept unchanged at Jori. In early May, the government had reduced the windfall tax on domestic crude oil from Rs 6,400 per tonne to Rs 4,100 per tonne.
In an earlier amendment, the government reimposed windfall profit tax on domestically produced oil from zero to Rs 6,400 per tonne and scrapped export duty on diesel.
The government had imposed a windfall tax from July 1, 2022, joining a growing number of countries that tax the super ordinary profits of energy companies. While a duty was imposed on exports of petrol, diesel and jet fuel (ATF), a special additional excise duty (SAED) was imposed on locally produced primary crude oil. In New Delhi, the government then imposed an export duty of Rs 6 per liter on petrol and ATF and Rs 13 per liter on diesel.
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profit tax calculation
Windfall profit tax is calculated by deducting any cost that the products are getting above a threshold. The levy was expected to offset the reduction in excise duty on petrol and diesel to provide relief to customers. But the unexpected cess reduction from initial levels is expected to reduce the receipts for the government.
Private refiners Reliance Industries Ltd and Rosneft-based Nayara Energy are the primary exporters of fuels such as diesel and ATF. The windfall levy on domestic crude is aimed at producers such as state-run Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.