The government on Tuesday cut unexpected tax on domestically produced crude oil while increasing the rate of export of diesel and jet fuel (ATF) in line with the rise in international oil prices. Tax on crude oil produced by companies like state-owned Oil and Natural Gas Corporation (ONGC) has been reduced from Rs 11,000 to Rs 9,500 per tonne with effect from November 2, a government notification showed.
In a fortnightly revision of windfall tax, the government increased the rate on export of diesel from Rs 12 per liter to Rs 13 per litre. The duty on jet fuel was also increased from Rs 3.50 to Rs 5 per litre. The levy on diesel includes road infrastructure cess (RIC) of Rs 1.50 per liter, the notification showed. When the levy was first introduced, an unexpected tax was imposed on the export of petrol, along with diesel and ATF. But the tax on petrol was abolished in subsequent fortnightly reviews.
While windfall profit tax is calculated by removing any price that producers are getting above a threshold, the levy on fuel exports is based on the cracks or margins that refiners earn on overseas shipments. These margins are mainly the difference between the international oil price and the cost. India imposed windfall tax for the first time on July 1, joining a growing number of countries that tax super ordinary profits of energy companies.
At that time, an export duty of Rs 6 per liter ($12 a barrel) was levied on petrol and aviation turbine fuel and Rs 13 per liter ($26 a barrel) on diesel. A windfall tax of Rs 23,250 per tonne (US$40 per barrel) was also imposed on domestic crude oil production. In the previous round the duties were partially adjusted on 20 July, 2 August, 19 August, 1 September, 16 September, 1 October and 16 October.
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