The centre may soon do away with the tax on windfall gains if crude oil prices continue to trend lower, Finance Ministry source told Business Today Television.
“The third review meet is likely to be around 16 August. Doing away with windfall tax will only benefit the current account,” the source added.
There has been a sharp decline in crude prices globally in last two weeks, with the price of Brent crude dropping below $95 a barrel in trade today.
A windfall tax is a one-off tax imposed by the central government on a firm. When the company gains from something that they are not responsible for, the financial profit that ensues is called windfall profits.
Last week, the centre had undertaken a second review of crude oil prices and decided to raise the tax on domestically produced crude oil to Rs 17,750 per tonne from Rs 17,000 per tonne, while export taxes on jet fuel were cut to zero from Rs 4 per litre.
The excise duty on export of diesel was reduced to Rs 5 per litre from Rs 11 per litre earlier. The excise duty on export of petrol continues to be nil.
“Government is not looking at windfall gains to collect taxes. We have reduced it in last two meets, as per data on crude prices received from Ministry of Petroleum,” the source added.
On July 20, in the first review since the windfall taxes were imposed, the government had lowered the tax on domestic crude and exports of diesel and aviation turbine fuel, even as it removed the tax on overseas shipment of petrol.
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