Govt increases windfall tax on domestic crude oil sales to ₹4,900 per tonne

The central government has increased the windfall tax on the sale of crude oil produced domestically to ₹4,900 per tonne in its latest price revision. The hike in windfall tax became effective from Saturday, March 16.

The government revises the windfall tax every fortnight in line with the global crude oil prices in the previous two weeks. The tax is levied on oil producers like ONGC to ensure that the companies do not get undue benefits from changes in global crude oil prices.

According to the finance ministry’s release, the windfall tax which is imposed as a Special Additional Excise Duty (SAED), has been kept at zero for the export of petrol, diesel and jet fuel or ATF.

The Centre in its previous revision on March 1 had raised the windfall tax on domestic crude oil to ₹4,600 per tonne from ₹3,300 per tonne earlier. The government also removed the tax of ₹1.5 per litre on diesel exports while keeping the duty nil on petrol and jet fuel exports.

Windfall tax on exports of diesel petrol jet fuel is imposed to check excess profits of domestic refiners due to price movement in global crude oil. Global crude oil prices remained volatile in the past two weeks due to global tensions. Oil prices gained around 2% this week after attacks on Russian oil refineries by Ukraine.

The Indian basket of crude oil also moved up from $82 per barrel on March 1 to $84 per barrel on March 15. Brent crude, the global oil benchmark, held the $85 per barrel level this week as the International Energy Agency upgraded the oil demand forecast for 2024 due to a decline in United States oil stocks.

The central government has been levying the windfall tax on oil products since July 2022. The tax was levied to check supernormal profits after Russia’s invasion of Ukraine led to a sharp rise in crude oil prices.