The government has hiked the windfall tax on domestically produced crude to Rs 4,400 per tonne, while it cut the levy on the export of diesel to its lowest of Rs 0.50 per litre and to nil on jet fuel (ATF), according to an official order.

According to the new revisions, the Special Additional Excise Duty on crude petroleum will be increased from Rs 4,350 per tonne to Rs 4,400 per tonne. This will come as a setback for the petroleum industry as it will lead to increased prices for crude petroleum produced by companies such as Oil and Natural Gas Corporation.

Crude oil pumped out of the ground and from below the seabed is refined and converted into fuels such as petrol, diesel and aviation turbine fuel (ATF). The government has also cut the tax on export of diesel to Rs 0.5 per litre from Rs 2.5, and the same on overseas shipments of ATF was cut to nil from Rs 1.50 a litre.

The new tax rates come into effect from March 4, the order said. This is the second reduction in rates in a fortnight. The rates were cut on February 16. The export levy on diesel and ATF is the lowest since the tax was introduced in July last year.

The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks. India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax super normal 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.

The export tax on petrol was scrapped in the very first review. Reliance, which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in the country