Following a decline in international rates, the Government on Wednesday, July 20, 2022, slashed the windfall tax on petrol, diesel, jet fuel and crude oil.
It scrapped a Rs.6 a litre tax on export of petrol and reduced the same on aviation turbine fuel (ATF) from Rs.6 a litre to Rs.4. Besides, the tax on diesel has been reduced to Rs.11 from rs.13 per litre, according to Finance Ministry notifications.
Further, the Rs.23,250 per tonne additional tax on crude oil produced domestically has been cut to Rs.17,000 per tonne
Also, overseas shipments from refineries located in export-focused ones were exempted from the levies that were imposed on July 1.
On July 13, PTI had reported that the windfall tax review was expected following a sharp fall in global oil prices.
India imposed windfall taxes on July 1, joining a growing number of nations that taxes super normal profits of energy companies. But international oil prices have cooled since then, eroding profit margins at both oil producers and refiners.
While international crude prices slumped on concerns of a potential global recession, cracks or margins on diesel, petrol and ATF crashed.
The July 1 export duties of Rs 6 per litre on petrol and ATF translated into USD 12 per barrel, while Rs 13 a litre tax on diesel was equivalent to USD 26 a barrel. The Rs 23,250 per tonne windfall tax on domestic crude production equalled USD 40 per barrel.
Post windfall tax, the realised spread on diesel and petrol fell to near loss-making levels while the realisation on aviation fuel (ATF) and crude had also gone below 15-year averages.