Windfall tax on domestic crude oil reduced to nil from Rs 4,100 per tonne

The government has on Monday cut the windfall profit tax on domestically produced crude oil to zero from Rs 4,100 per tonne in line with softening international oil prices, according to an official order. This will come into effect from May 16. 

The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been reduced to nil, the order dated April 15 said. Aviation turbine fuel continues to have nil special additional excise duty. The export tax on petrol was scrapped in the very first review.

The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.

Meanwhile, oil prices rose about a dollar a barrel on Monday on the prospect of tightening supplies in Canada and elsewhere, although recession fears kept pressuring the market.

Brent crude futures LCOc1 were up $1.33, or 1.8% to $75.5 a barrel at 12:02 p.m. EDT (1602 GMT). US West Texas Intermediate crude CLc1 was at $71.34 a barrel, up $1.3, or 1.9%.

Wildfires raged in Alberta, Canada, shutting in large amounts of crude supply, and prices rose on fears they could worsen.

At least 300,000 barrels of oil equivalent per day (boepd) production was shut in last week in Alberta. In 2016, wildfires knocked more than a million boepd of production offline there.

Crude oil pumped out of the ground and from below the seabed is refined and converted into fuels like petrol, diesel and ATF.

India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre ($12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel.

A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.