News

Published: May 14, 2024
Updated: May 14, 2024

India Slashes Windfall Tax on Petroleum Crude

Tax Reduction Announcement

Effective May 16, India has reduced the windfall tax on petroleum crude from ₹8,400 per metric ton to ₹5,700, according to a recent Reuters report. This move aims to address industry dynamics and support market stability.

Tax Status for Diesel and ATF

Despite the reduction in the windfall tax for petroleum crude, there is no change in the tax rates for diesel and aviation turbine fuel (ATF), as outlined in a government notification issued on May 15.

Tax Fluctuations

The windfall tax on petroleum crude is subject to periodic revisions, with adjustments made every two weeks. Previously, on May 1, the tax was lowered to ₹8,400 per metric ton from ₹9,600.

In April 2024, the tax saw successive increases, rising from ₹4,900 to ₹6,800 per metric ton on April 4, and then further to ₹9,600 per metric ton on April 16. March 2024 witnessed similar fluctuations, with tax rates starting at ₹4,600 per metric ton and later increasing to ₹4,900 per metric ton.

Purpose of Windfall Tax

The windfall tax was introduced by the Indian government in July 2022 to regulate crude oil producers and exports of gasoline, diesel, and ATF. This measure aimed to prevent private refiners from prioritizing overseas sales over domestic supply during periods of elevated global prices.

Global Oil Market Trends

Meanwhile, global oil prices continued their upward trajectory on May 16, driven by signs of stronger demand in the United States and data indicating slower-than-expected inflation. Brent futures rose to $83.17 a barrel, while US West Texas Intermediate crude climbed to $79.06 a barrel.