Petrol Diesel Price: The government has officially removed the windfall tax on crude oil, aviation turbine fuel (ATF), petrol, and diesel exports. This decision, which takes effect immediately, follows nearly two months of discussions. However, the change is expected to benefit oil companies like Reliance and ONGC, as it could improve their refining profits. Moreover, the government has also withdrawn Road and Infrastructure Cess (RIC) on export of petrol and diesel.
What Is Windfall Tax?
A windfall tax is a higher tax levied by the government on specific industries when the industry experience unexpected and above-average profits due to various global and geopolitical events which are outside the control of the industry.
Tax Removal Boosts Refining Margins
The removal of the tax will make these companies make higher profits on refining margins. The Ministry of Finance notification says that the special additional excise duty (SAED), commonly known as windfall tax on the production of petroleum crude and on the export of Aviation Turbine Fuel (ATF), motor spirit, commonly known as petrol and high spirit diesel oil will no longer be levied.
The windfall tax used to be revised every 15 days based on international crude oil prices after it was imposed in July 2022. The tax rates were reviewed every fortnight, based on the average oil price in the last two weeks.
Tax Formula
The tax formula used to be managed by the Department of Revenue and adjusted as per the fluctuations in global oil prices. But now with average crude oil prices coming down government was not earning much in revenue from any of the sectors ATF, Crude oil, petrol or diesel so it decided to withdraw the windfall tax. (With ANI Inputs)\
