The Modi government has hiked the windfall tax on domestically produced crude oil by over 23 per cent to Rs 2,100 per tonne amid a spike in energy prices in the global markets.
The government has also raised the windfall tax on aviation turbine fuel and highspeed diesel for exports. The new tax rates are effective from January 3.
The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been increased to Rs 2,100 per tonne from Rs 1,700 per tonne, the order issued late Monday night said.
Crude oil pumped out of the ground and from below the seabed is refined and converted into fuel such as petrol, diesel and aviation turbine fuel (ATF).
The government has also raised the tax on the export of diesel to Rs 6.5 per litre from Rs 5 per litre and overseas shipments of ATF to Rs 4.5 a litre from Rs 1.5 a litre.
Tax rates were cut at the last fortnightly review on December 16, following a decline in global crude oil prices. International oil prices have since then firmed up, necessitating higher tax. The levy on crude oil has been cut steeply to Rs 1,700 per tonne from Rs 4,900 per tonne, the order dated December 15 said.
India, a major consumer and importer of oil, has been buying Russian crude barrels at well below a $60 price cap agreed by the West.
India first imposed windfall profit taxes on July 1, 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 has since been scrapped.
The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
Reliance Industries, which operates India’s largest only-for-export oil refinery at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are the primary exporters of fuel in the country.
The government levies tax on windfall profits made by oil producers on any price they get above a threshold of $75 per barrel.
The basket of crude oil that India imports averaged $77.88 per barrel in December against $87.55 last month. It averaged $91.70 per barrel in October.
The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the realised international oil price and the cost.
