After imposing a steep ‘windfall’ tax on Relianc Industries, the Modi government has backtracked within days. But RIL’s gain is taxpayers’ loss. So what would be taxed next? Analysts say the revision in taxes will result in foregone revenue of Rs 67,600 crore and it remains to be seen how the government offsets this revenue loss. There have been media reports of the government potentially looking to include the gas sector in windfall taxes, though there is no clarity on what would define the gas sector. Would it be only upstream (ONGC, RIL) or include midstream (GAIL) and downstream companies? Whatever be the final decision, consumers need to get set for a steep increase in the GST rates in the coming days.

While the government had made it clear that it would review the taxes every fortnight, analysts are still not clear as to what would be reviewed going forward. The taxes are fixed and not linked to any oil price or refining margin and this makes it difficult to predict the next policy move.