New Delhi: On December 16, the central government reduced the windfall tax on domestically produced crude oil and also reduced the levy on diesel. The revised tax rates have come into effect from December 16, 2022. In a notification, the Finance Ministry said that the windfall tax on locally produced crude oil has been reduced from Rs 4,900 per tonne to Rs 1,700 per tonne.
While the windfall tax on high-speed diesel for exports has been reduced to Rs 5 per liter from Rs 8 earlier. This includes an additional cess of Rs 1.5 per liter. At the same time, the levy on air fuel ie ATF has been reduced to Rs 1.5 per liter. This decision of the government will provide relief to those companies, which export crude oil production to petrol-diesel and ATF.
Does the Center impose a windfall tax from July 1?
Earlier, in the review meeting held on December 1, 2022, on the sale of domestic crude oil by the central government, it was reduced from Rs 10,200 to Rs 4,900 per ton. While the windfall tax on petrol was abolished, the tax on ATF was retained at Rs 5 per liter.
Experts believe that with this step of the government, the expectation of a reduction in the rates of petrol and diesel has increased. Now the supply of oil is very good in the domestic market, due to which the pressure on the companies has decreased and they can cut the prices.
The Government of India imposed Windfall Tax for the first time on 1st July. With this, India has joined the list of countries that tax the profits of energy companies. Government producers such as the Oil and Natural Gas Corporation (ONGC) and Vedanta-controlled Cairn have been hit by the windfall tax on domestic crude oil.
News agency PTI had earlier reported that ONGC had urged the Center to withdraw profit tax on domestically produced crude oil and use the dividend route to tap into bumper earnings resulting from the jump in global energy prices. However, Union Petroleum and Natural Gas Minister Hardeep Singh Puri had said that the windfall tax is under the purview of the finance ministry and the ministry would review it every fortnight.
What is windfall tax?
Windfall tax is levied on such companies or industries, which have huge profits under certain circumstances. For example, after the Ukraine-Russia attack, there was a tremendous increase in the prices of crude oil at the international level. Due to this huge profits were made to the oil companies, hence a windfall tax was imposed on them.
