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Govt cuts WINDFALL profit tax on domestic crude; Scrap levy on jet fuel

New Delhi: In line with the fall in international rates, the government on Saturday cut windfall tax on locally produced crude oil and diesel and abolished levy on export of jet fuel with effect from October 2. In the sixth fortnight review, the government reduced the tax on domestically produced crude oil to Rs 8,000 per tonne from Rs 10,500 per tonne. The levy on export of diesel was reduced from Rs 10 per liter to Rs 5 per litre.

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According to a notification issued by the Finance Ministry late Saturday, the tax on Aviation Turbine Fuel (ATF) exports at the rate of Rs 5 per liter was abolished with effect from October 2. The tax rates have been reduced after the softening of crude oil prices in the international markets.

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While private refiners Reliance Industries Ltd and Rosneft-based Naira Energy are major exporters of fuels such as diesel and ATF, the unexpected levy on domestic crude targets producers such as state-owned Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.

India imposed windfall tax for the first time on July 1, joining a growing number of countries that tax super ordinary profits of energy companies. But international oil prices have cooled since then, reducing profit margins for both oil producers and refiners.

An export duty of Rs 6 per liter ($12 a barrel) was imposed on petrol and ATF and Rs 13 per liter ($26 a barrel) on diesel. A windfall tax of Rs 23,250 per tonne (US$40 per barrel) was also imposed on domestic crude oil production. In the last five rounds on 20 July, 2 August, 19 August, 1 September and 16 September the duties were partially adjusted and removed for petrol.

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