India cuts windfall tax on crude oil

The central government on Wednesday cut the windfall tax on crude oil to Rs17,000 per tonne from the previous Rs23,250 per tonne. This move comes amid the latest decline in global crude oil prices.

Taking into account windfall gains being accumulated by the domestic crude producers due to rising global crude prices in recent months, the Centre had on July 1 imposed a cess of Rs23,250 per tonne on crude oil. The domestic crude producers sell crude to domestic refineries at international parity prices.

A tax levied on an unforeseen or unexpectedly large profit is called windfall tax.

The new rates will be effective from Wednesday, a government notification said.

Besides, the recently imposed special additional excise duty at Rs13 per litre on diesel on exports has now been reduced to Rs10.

For petrol, the export tax has been removed. On July 1, the export tax of Rs6 per litre on petrol was imposed.

"While crude prices have increased sharply in recent months, the prices of HSD and Petrol have shown a sharper increase. The refiners export these products at globally prevailing prices, which are very high," the government had explained the rationale behind the export tax move.