Government Slashes Windfall Tax on Petroleum Crude: New Rates Effective January 16

In a recent development, the Indian government has revised the windfall tax on petroleum crude, bringing it down to 1,700 rupees ($20.53) per tonne from the previous rate of 2,300 rupees per tonne. The decision, outlined in a government notification on Monday, is set to take effect from January 16.

This move comes on the heels of a significant hike in the windfall tax on petroleum crude on January 2, when the government increased it from 1,300 rupees to 2,300 rupees per tonne. The latest reduction is seen as an adjustment to strike a balance and address concerns in the energy sector.

The windfall tax was initially introduced in July 2022 on crude oil producers in India. The tax was extended to cover exports of gasoline, diesel, and aviation fuel, as private refiners sought to capitalize on robust refining margins through overseas sales rather than selling domestically. Notably, the government revises the tax fortnightly to adapt to changing market dynamics.

This adjustment aims to create a more favorable environment for the energy sector while ensuring a fair balance between government revenue and the interests of crude oil producers. As the revised rates come into effect from January 16, stakeholders in the energy industry will be closely monitoring the impact on refining margins and the overall dynamics of the petroleum crude market in India.