India slashes windfall tax on diesel to Re 1, crude oil to Rs 6,300, rates effective from Nov 16

The Centre on Thursday slashed the windfall tax on crude oil from Rs 9,800 per tonne to Rs 6,300 per tonne. The windfall tax on diesel was cut from Rs 2 per litre to Rs 1.

The new rates will come into effect from Thursday (November 16). A windfall tax is levied on domestic crude oil if the rates of the global benchmark rise above $75 per barrel. Export of fuel -- diesel, aviation turbine fuel (ATF) and petrol -- attract the tax if product cracks (or margins) rise above $20 per barrel.

In July 2022, India first introduced windfall profit taxes. At that time, export duties of Rs 6 per litre each were levied on petrol and ATF and Rs 13 per litre on diesel.

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, an official notification on October 31 said, which came into effect from November 1. Further, the SAED on the export of diesel was reduced was reduced to Rs 2 per litre from Rs 4 a litre.

Tax on jet fuel or Aviation Turbine Fuel (ATF) remained nil. SAED on export of petrol also continues to be zero.

Earlier in October, the tax was reduced when the Centre slashed the windfall tax on crude from Rs 12,100 per tonne to Rs 9,050 per tonne and eliminated the windfall tax on aviation turbine fuel entirely. These steps were taken after a noticeable drop in the average price of India's imported crude oil, which was recorded at $84.78 per barrel this month, down from $90.08 in October and $93.54 in September.

To ensure that domestic tax rates remain in step with global oil prices, the Centre reviews these rates every fortnight.

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