Govt cuts windfall tax on crude oil by 36%, to ₹4,100 per tonne

The Central Board of Indirect Taxes and Customs (CBIC) on Tuesday cut the windfall tax on crude oil production by about 36% to ₹4,100 a tonne amid softening global oil prices.

Since 19 April, when the price was last revised, the windfall tax levied as a special additional excise duty on crude oil was at ₹6,400 a tonne. The decision was taken in public interest, according to an official order.

The tax aimed at mopping up a part of the increased profits oil producers make during rising crude oil prices is revised every fortnight.

There has been no increase in special additional excise duty on exports of diesel, petrol or jet fuel, none of which currently attract any windfall tax when exported.

The Indian basket of crude, which represents prices of Oman and Dubai for sour grades and Brent for sweet grade, eased to $80.31 a barrel on 28 April from $86.09 a barrel on 17 April, according to the Petroleum Planning and Analysis Cell.

Since India follows trade parity pricing of crude oil and petrol, producers of crude oil and refineries that sell finished products realize global prices in the local market. The windfall tax on profits of oil producers and that of refiners on exported products thus enables the government to share a part of the gains made from any surge in their global prices.

Reuters reported early on Tuesday that oil prices held steady during Asian trade amid mixed data from China, and as the market weighed forecasts of declining crude stockpiles with expectations of a U.S. interest rate hike. Brent crude was up by 7 cents to $79.38 a barrel by 0425 GMT, the report said.