More Stories

Informist, Monday, Dec. 2, 2024

 

--Govt removes Special Additional Excise Duty on petroleum crude production
--Govt scraps Special Additional Excise Duty on ATF, petrol, diesel exports
--Govt removes Road and Infrastructure Cess on petrol, diesel exports
 

NEW DELHI - The government has scrapped the windfall gains tax, or special additional excise duty, on domestic petroleum crude production, exports of aviation turbine fuel, petrol and diesel, the finance ministry informed the Lok Sabha Monday. Additionally, the government also removed the Road and Infrastructure Cess on export of petrol and high speed diesel oil. These changes are effective immediately.

 

The scrapping of windfall gains tax comes after the petroleum ministry's representation to the finance ministry in September regarding the review of the levy of the tax. A finance ministry official had on Thursday told the media that the ministry was evaluating the relevance of the tax, while also weighing the revenue implications if it was scrapped entirely. 

 

Introduced in July 2022, these taxes in the form of a cess, were for taxing supernormal gains of oil producers and fuel exporters due to high oil and fuel prices globally. The government reviewed these taxes on a fortnightly basis of oil prices and fuel margins in the international market. 

 

Since July 2022, the tax has been revised 50 times, with the latest being on Sept. 17, when it was reduced to nil on domestic crude oil. The windfall tax on exports of diesel, aviation turbine fuel, and petrol has remained nil for a much longer time. The latest notification followed a fall in crude prices in international markets--below $75 per barrel--the threshold the government maintained for imposing the tax. 

 

Brent crude oil futures have traded near $70-$74 per barrel in the last fortnight. When the government had first levied the cess on domestic crude, it was priced at INR 23,250 per tonne, which translated to around $40 a barrel. The scrapping of windfall gains tax comes as a huge positive for upstream oil companies such as Oil and Natural Gas Corp Ltd., Oil India Ltd., and Vedanta Ltd. and negative for the government as it will pinch its indirect tax kitty. 

 

The government had imposed the levies on fuel exports after fuel pumps in some parts of the country faced supply shortages, partly due to private sector refiners reducing domestic sales of petrol and diesel in favour of significantly more lucrative exports. Private fuel retailers, Reliance Industries Ltd. and Nayara Energy, reportedly reduced domestic retail sales due to heavy under-recoveries.

 

As for domestic crude oil, upstream oil companies were raking in massive profits due to the surge in global oil prices in the aftermath of Russia's invasion of Ukraine in 2022. Indian oil producers price crude oil in line with global prices.

 

The Road and Infrastructure Cess, on the other hand, was introduced in 1998 to fund infrastructure projects. This cess on the export of petrol and high speed diesel oil was also reviewed periodically with the latest revision on July 2022 when it was reduced to INR 1 per litre for both the commodities.  End

 

US$1 = INR 84.69

 

Reported by Priyasmita Dutta

Edited by Vandana Hingorani

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.