India has significantly increased windfall profit duty on petroleum from Rs.1,300 to Rs.2,300 per ton. However, New Delhi has abolished taxes on diesel and jet fuel, and the petrol tax will remain unchanged.
The petrol tax (ATF) on diesel has been abolished, as has the earlier petrol tax of 50 paise per liter and Rs.1 per litre. The new rates will come into effect on January 2, 2024.
On December 18, the tax levied on domestic crude oil in the form of Special Additional Duty (SAED) was reduced from Rs five thousand to Rs 1,300 per ton. Also, SAED on diesel sales has been reduced from Rs.1 per liter to 50 paise per litre.
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 (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel.
The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above USD 75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above USD 20 per barrel.
