Windfall tax on petroleum crude slashed to ₹2,100 per tonne, retained as nil for diesel, ATF

The central government, via a notification issued late on August 16, has slashed the windfall tax levied on petroleum crude to ₹2,100 per tonne.

Meanwhile, the windfall tax on the sale of diesel and aviation turbine fuel (ATF) by Indian refiners has been retained as nil.

The Indian government began imposing windfall tax, or the Special Additional Excise Duty (SAED), from July 2022 onwards after refiners drew superprofits due to the export of crude at elevated global prices. The move is aimed at ensuring sufficient supply in the domestic market.

The tax rates are revised on a fortnightly basis, after taking into consideration the average global oil prices over the preceding two weeks.

On Friday, international crude oil rates edged lower, with Brent futures closing at $79.58 per barrel, down 1.8%. The US West Texas Intermediate (WTI) futures also closed 1.9% lower at $76.65 a barrel.

Oil stocks to be in focus

The reduction in windfall tax on petroleum crude is expected to benefit Indian refiners, as it will improve the margins on its export. This will keep oil stocks in focus during the early trading session on Monday, August 19.

In the past, an increase in the SAED on petroleum crude has led to a plunge in the shares of oil marketing companies (OMCs) in the subsequent trading session. On the other hand, its reduction has been followed by OMCs trading higher at the bourses.

Notably, oil stocks traded in the green on Friday, with BPCL settling 2.29% higher at ₹332.5 apiece on the NSE, and HPCL ending 1.81% higher at ₹379.85.

Indian Oil climbed 2.09% to ₹167.17 per share, whereas ONGC edged 0.44% higher to end the day's trade at ₹329.6.