The government announced on Monday scrapped the 30-month-old windfall profit tax on domestically-produced crude oil and the export of jet fuel (ATF), diesel, and petrol, citing a drop in international oil prices. Minister of State for Finance Pankaj Chaudhary presented a notification in the Rajya Sabha, outlining the scrapping of the levy on crude oil produced by firms such as state-owned Oil and Natural Gas Corporation (ONGC) and on fuel exports by companies like Reliance Industries Ltd.
The notification rescinded June 30, 2022 order and withdrew levy of special additional excise duty (SAED) on production of crude oil (which is refined into fuels like petrol and diesel) and on export of aviation turbine fuel (ATF), diesel and petrol, he said.
In addition, the government has withdrawn the road and infrastructure cess (RIC) on the export of petrol and diesel. India first introduced windfall profit taxes on July 1, 2022, aligning with a global trend of taxing the extraordinary profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) were imposed on petrol and ATF, and Rs 13 per litre (USD 26 per barrel) on diesel. A windfall profit tax of Rs 23,250 per tonne (USD 40 per barrel) was also levied on domestic crude production. The tax rates were reviewed bi-weekly, based on average oil prices from the previous two weeks.
While the levy on export of petrol became nil in the very first fortnightly review that happened in mid-July 2022, the tax on diesel and ATF exports became nil in mid April 2023 but were back in August that year. There has been no levy on export of ATF and diesel since March this year. As far as crude oil is concerned, the levy fluctuated every fortnight. It was Rs 1,850 per tonne in August 31, 2024 and became nil in the next fortnightly review.