Windfall tax effect: Reliance, ONGC, Oil India shares under pressure
Upstox
2 min read • Updated: April 4, 2024, 10:09 AM
Summary
The windfall tax on crude petroleum increased by over 38% to ₹6,800 per tonne from ₹4,900 per tonne earlier, effective from April 4. In recent weeks, global crude oil prices have risen substantially, with Brent Crude oil trading near its five-month high of $90 per barrel amid supply concerns.
The government on April 3 announced a hike in windfall tax on crude petroleum produce in the domestic market. As per notification, windfall tax on crude petroleum is increased by over 38% to ₹6,800 per tonne from ₹4,900 per tonne earlier, effective from April 4.
Windfall tax on diesel, petrol and aviation turbine fuel (ATF) continues to remain zero. The government reviews and adjusts the windfall tax rate every two weeks based on the average crude oil price in the international market.
In recent weeks, global crude oil prices have risen substantially, with Brent Crude oil trading near its five-month high of $90 per barrel amid supply concerns. This may have prompted the centre to hike windfall tax on domestic crude oil producers.
Why did Govt. introduced windfall tax?
The government first introduced windfall tax in July 2022 to discourage domestic producers from selling their crude oil in the global market to profit from high international crude oil prices. This ensured sufficient supply in the domestic market.
In the previous review meeting on March 15, the government raised the windfall tax on petroleum crude to ₹4,900 per tonne from 4,600 per tonne. The recent rise in
The windfall tax is levied in the form of a Special Additional Excise Duty (SAED) from domestic crude oil producers.
Following the announcement, shares of oil and gas companies like ONGC (-0.1%), Reliance Industries (-0.5%) and Oil India (-1.58%) trades in red, while the Oil & Gas index is 0.15% lower in morning trade.