The Centre is considering scrapping the windfall tax on domestic crude as oil prices continue their downward trajectory. The levy, implemented in 2022 to capitalise on soaring oil prices, has become less relevant as global markets stabilise.
Tarun Kapoor, adviser to Prime Minister Narendra Modi, said the finance ministry is evaluating the need for the windfall tax.
The ministry of petroleum and natural gas has already submitted a proposal to the finance ministry seeking withdrawal.
“I think the petroleum ministry has written to the finance ministry. Anyway, there is not much relevance in it (windfall tax) now,” Kapoor told reporters on the sidelines of the World Biogas Association India Congress 2024 here on Wednesday.
The review provides potential relief for major oil firms such as Reliance and ONGC.
The windfall tax, a special additional excise duty, was introduced to curb the profits of oil and gas companies amid the Russia-Ukraine war. However, as oil prices have retreated, the tax has become less effective.
Since September 18, the windfall tax on domestically produced crude oil has been nil. The tax on exports of diesel and aviation turbine fuel has also been zero.
Crude oil prices have remained relatively subdued despite market volatility. The December contract for Brent crude oil on the Intercontinental Exchange traded at $75.63 per barrel on Wednesday, down 0.54 per cent from the previous close.
