India reduced its windfall tax on crude oil from Rs 4,100 ($50.13) per tonne to zero. Domestic crude oil now only carries a windfall tax of Rs 4,100 per tonne as opposed to Rs 6,400 per tonne previously. However, the administration decided to maintain the zero percent windfall tax on petrol, diesel and aviation turbine fuel (ATF). The government had said that the windfall profit tax on domestically produced oil will be reinstated and increased from zero to Rs 6,400 per tonne. Additionally, the government eliminated the diesel export tax.
The windfall profit tax is calculated by deducting any price that producers get that is more than a certain threshold. In July 2022, India became one of an increasing number of countries that tax the energy corporation’s above-average profits.
The government had increased the tax on petrol, diesel and ATF exports as well as the windfall tax on crude oil producers because private refiners desired to profit from high refining margins in foreign markets.
The imposition of the windfall profit tax was anticipated to help consumers and make up for the reduction in the excise charge on fuel and diesel. However, it is anticipated that the government’s revenue will decrease as a result of the windfall tax’s drop from its initial levels.