Govt revises windfall tax on domestic crude to Rs 6,400; diesel export duty scrapped

The government has revised the windfall tax on domestic crude oil production to Rs 6,400 per tonne as it aims to rationalise the tax structure in the petroleum sector as well as promote investment in the industry. 

Windfall tax is a surtax that is imposed on businesses or sectors that benefit above-average profits due to economic expansion. 

The government increased the Special Additional Excise Duty (SAED) on crude petroleum from nil to Rs 6,400 per tonne. There has been no changes on the SAED on petroleum and aviation turbine fuel (ATF) and will remain at nil. 

The duty will be effective from April 19. The tax rates are reviewed every fortnight. 

The export duty on diesel will be removed, after which the SAED on diesel will reduce from Re 0.50 per litre to nil. In the previous revision, the tax on export of diesel was reduced to Re 0.50 from Re 1. 

The revision of windfall tax on crude oil production is expected to generate additional revenue for the government but impact oil companies that will have to pay higher tax. The manufacturing sector will be positively impacted by the removal of export duty on diesel as it relies heavily on diesel for power generation as well as transportation. 

Also read: Govt removes windfall tax on crude production