Centre scraps windfall tax on domestic crude oil, exports of ATF, petrol, and diesel

The Union government on Monday scrapped the windfall tax on domestically-produced crude oil and exports of aviation turbine fuel (ATF), petrol, and diesel as global prices stabilised in recent months. The road and infrastructure cess (RIC) levied on export of petrol and diesel has also been withdrawn.

The windfall tax, imposed in the form of a Special Additional Excise Duty (SAED), has been reviewed and notified fortnightly since its inception.

"Notification nos 29/2024 and 30/2024 dated 2.12.2024 issued with immediate effect for withdrawal of windfall tax i.e special additional excise duty (SAED) levied on production of crude and export of ATF, SAED and Road and Infrastructure Cess (RIC) on export of petrol and diesel," the finance ministry said in a notification tabled in Rajya Sabha.

The government had already reduced the windfall tax on domestically produced crude oil to nil per tonne in September following its August 31 revision when the tax on crude petroleum was kept at ₹1,850 per tonne.

The SAED on the export of diesel, petrol, and jet fuel had been retained at 'nil' since September 18. Now, the levies on both domestically produced crude oil and fuel exports have been scrapped.

India first introduced windfall profit taxes on July 1, 2022, in line with global practices to tax supernormal profits earned by energy companies during periods of high crude oil prices. The government introduced windfall tax on petrol, diesel and ATF after some oil refiners made phenomenal profits on exporting fuel at the expense of domestic supplies.

The decision to scrap the levy follows softening in international oil prices. The basket of crude oil that India imports averaged USD 73.02 per barrel in November, down from USD 75.12 a barrel in the previous month.

The abolition of windfall tax on ATF, crude products, and petrol and diesel products is expected to bring relief to oil companies like state-owned ONGC and Reliance Industries Ltd, which operates India's largest only-for-export oil refinery at Jamnagar in Gujarat.

Reliance Industries Limited (RIL) shares were trading at ₹1,304.90 apiece, up 1% from the Friday close.

Shares of Oil and Natural Gas Corporation Ltd (₹255.10 apiece) and Oil India were trading in red (₹481.50), down 0.62% and 1.85% respectively from the previous close.