PNS|New Delhi
The government has hiked the windfall profit tax on crude oil produced in the country and on export of diesel, while bringing back the levy on overseas shipments of ATF.
The tax, levied in the form of special additional excise duty, on domestically produced crude oil has been raised to Rs 7,100 per tonne from Rs 4,250 per tonne, according to an official notification.
Besides, the special additional excise duty (SAED) on the export of diesel has been increased to Rs 5.50 per litre from Re 1 per litre.
A duty of Rs 2 per litre will be imposed on the export of jet fuel or ATF with effect from August 15.
There was no SAED on jet fuel prior to this levy.
SAED on petrol will continue to be zero.
The new tax rates come into effect from Tuesday, the order dated August 14, said.India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF 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 crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) was also levied.
The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above USD 75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above USD 20 per barrel.
Product cracks or margins are the difference between crude oil (raw material) and finished petroleum products.
International crude oil prices averaged USD 86.8 per barrel in August, up from USD 80.37 in the previous month and USD 74.93 a barrel in June.
The levy on domestic crude oil dropped to nil in the first half of April as international crude oil prices fell but was back in the second half in step with a rise in rates.
Levy on diesel became nil in April but the levy was brought back in August. Levy on ATF became nil in March and has now been brought back.
The export tax on petrol was scrapped in the very first review.
Crude oil pumped out of the ground and from below the seabed is refined and converted into fuels like petrol, diesel and aviation turbine fuel (ATF).
Reliance Industries Ltd, which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in the country.
