INDUSTRY

Windfall Profit Tax on locally-produced crude oil cut, levy on ATF exports scrapped

The government cut Windfall Profit Tax on locally-produced crude oil and diesel on Saturday in line with a fall in international rates. It also scrapped the levy on the export of jet fuel with effect from October 2.

At the sixth fortnightly review on Saturday, the government reduced the tax on domestically-produced crude oil to Rs 8,000 per tonne from Rs 10,500 per tonne. 

The levy on the export of diesel was reduced to Rs 5 per litre from Rs 10 per litre.

The tax at the rate of Rs 5 a litre on aviation turbine fuel (ATF) exports was scrapped with effect from October 2, according to a Finance Ministry notification issued late on Saturday night. 

The reduction in the tax rates follows the easing of crude oil prices in international markets. 

While private refiners Reliance Industries and Rosneft-owned Nayara Energy are the principal exporters of fuels, like diesel and ATF, the windfall levy on domestic crude oil targets producers like State-owned Oil and Natural Gas Corporation (ONGC) and Vedanta. 

India had first imposed Windfall Profit Tax on July 1, joining a growing number of nations that taxed super-normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners. 

Export Duty of Rs 6 per litre ($12 per barrel) were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel. 

A Rs 23,250 per tonne ($40 per barrel) Windfall Profit Tax on domestic crude oil production was also levied. 

The duties were partially adjusted in the previous five rounds on July 20, August 2, August 19, September 1 and September 16 and were removed for petrol. 

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