windfall tax: Centre lowers windfall tax on crude to Rs 5,000/tonne from Rs 6,300/tonne

The Indian government on Thursday lowered the windfall gains tax on crude oil to Rs 5,000 per tonne from Rs 6,300 per tonne. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks, with the Centre slashing it from Rs 9,800 per tonne to Rs 6,300 per tonne two weeks ago, on November 16.

The tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil was increased to Rs 9,800 per tonne from Rs 9,050 a tonne, according to an official notification on October 31 with effect from November 1. Further, the SAED on the export of diesel was reduced to Rs 2 per litre from Rs 4 a litre.

The Indian government first imposed the levy in July of 2022, starting off with export duties of Rs 6 per litre (USD 12 per barrel) each on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel.

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.