Windfall tax: Government scraps windfall tax on crude oil

The government of India on Tuesday announced the scrapping of windfall tax on crude oil from Rs 1,850 per tonne. This will be effective from September 18, said a government notification. India had imposed windfall tax since July 19, 2022.

This is the second time since the tax was imposed that it is reduced to nil. Last time on April 4, 2023, the centre had reduced it to zero.

Windfall tax in India

India imposed a windfall tax on crude oil producers from July 2022 and extended the levy on exports of gasoline, diesel and aviation fuel, as private refiners wanted to sell fuel overseas to gain from robust refining margins instead of selling locally.

The Union government, on August 31, slashed windfall tax on domestically produced crude oil to Rs 1,850 per tonne from previous Rs 2,100 per tonne.

Previously, the government on August 17 revised the windfall gains tax on petroleum products, reducing the levy on domestic crude oil to Rs 2,100 per tonne, down from the previous Rs 2,400 per tonne.

The Indian government reviews the windfall tax every fortnight, and the cut comes after a significant decline in crude prices.

Global benchmark Brent crude prices have fallen to below $75 a barrel from over $92 a barrel in April.

A windfall tax is levied by governments when an industry unexpectedly earns large profits, mainly due to an unprecedented event.