The government has hiked the windfall tax on domestically produced crude oil to Rs 4,600 per tonne from Rs 3,300 per tonne with effect from Friday.

The tax is levied in the form of Special Additional Excise Duty (SAED).

SAED on the export of diesel, however, has been cut to nil from Rs 1.50 a litre, according to an official notification. On petrol and jet fuel or ATF, the levy has been retained at nil.

The new rates are effective from March 1.

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

The average price of the Indian crude basket increased to $81.50 per barrel in February from $79.22 in January.

The increase has come in the backdrop of a rise in global crude oil prices on supply concerns

India first imposed windfall profit taxes on July 1, 2022, 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 windfall tax is levied on domestic crude oil if the rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above $20 per barrel.

Price rise

Oil prices rose on Friday and were set for weekly gains as markets awaited an Opec+ decision on supply agreements for the second quarter while weighing fresh US, European and Chinese economic data.

Brent futures for May were up $1.43, or 1.75 per cent, at $83.34 a barrel by 1334 GMT. The April Brent futures contract expired on Feb. 29 at $83.62 a barrel.

A decision on extending Opec+ cuts is expected in the first week of March, sources have said.

With inputs from Reuters