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Govt issues clarification on windfall tax on oil companies

Govt issues clarification on windfall tax on oil companies

The ministry said that the levy of SAED from July 1, 2022 was accompanied by the government’s announcement of a mechanis: m of fortnightly review and that six such reviews have already taken place since the levy of SAED.

Crude oil prices witnessed extreme volatility in 2022, resulting in very high prices for end consumers at petrol pumps. Crude oil prices witnessed extreme volatility in 2022, resulting in very high prices for end consumers at petrol pumps.

The Ministry of Petroleum and Natural Gas on Tuesday released a clarification on reports claiming that the government is seeking changes in the levy of Special Additional Excise Duty (SAED) on oil companies. The ministry said that the levy of SAED from July 1, 2022 was accompanied by the government’s announcement of a mechanism of fortnightly review and that six such reviews have already taken place since the levy of SAED.

"Selective leakage of any such communication, including one which is six weeks old, without knowledge of context, background or communications made previously or thereafter gives a misleading impression and provides an incomplete picture. Such mischievous reporting is totally uncalled for and raises doubts about the motive behind such reporting," it said.

Crude oil prices witnessed extreme volatility in 2022, resulting in very high prices for end consumers at petrol pumps.

The ministry mentioned that “windfall tax” is one of the measures which helps in dealing with the situation. The extent of its applicability, reference period, amount of cess/ tax/ duty, incidence of tax liability, mechanism for review is integral to such a tax.

Windfall taxes are levied on supernormal profits of energy companies. India first imposed windfall profit tax on July 1, but as international oil prices cooled down since, profit margins of both oil producers and refiners eroded.

The windfall profit tax was increased to Rs 7 per litre from Rs 5 per litre on the export of diesel last month. The government had also brought a Rs 2 per litre tax on ATF exports in the fortnightly review last month.

Also read: Windfall profit tax hiked on export of diesel, cut on domestic crude oil

Also read: Govt reduces windfall tax on crude oil from Rs 13,000 to Rs 10,500 per tonne