Dec 02, 2024 08:36 PM IST
On Monday, the revenue department rescinded the June 30, 2022 notification that levied windfall tax due to decline in global oil prices
NEW DELHI: The government on Monday withdrew windfall tax on domestically-produced crude oil and exports of petrol, diesel and aviation turbine fuel, relenting to the industry demand after international oil prices plunged.
The Department of Revenue on Monday “rescinds” the notifications it had issued on June 30, 2022 levying the windfall tax and the decision came into force with “immediate effect” in the “public interest”, an official said quoting the order. “Industry wanted the government to remove the tax as there was no justification for such levies after international oil prices remained subdued for months,” he said requesting anonymity.
The government imposed the windfall tax on petroleum sector from July 1, 2022 after private refiners substantially curtailed domestic supply of transportation fuels and opted for exports to make huge profits due to a spike in overseas demand. Days before the decision, the benchmark Brent crude price was around $110-120 a barrel. Brent crude has been consistently below $80 a barrel since August 2024 and is currently hovering at $72 per barrel.
According to the latest merchandise trade data, subdued international oil prices have depressed India’s per unit realisation of petroleum product exports which plunged over two-and-a-half times to $312.50 per tonne in the first half of 2024-25 from around $792 a tonne in the first half of 2023-24 despite robust jump in volume-wise shipments.
Poor realisation through exports of refined petroleum products has been a major drag for India’s overall export performance. While India’s export of petroleum products fell by over 12.7% to $36.4 billion in April-September 2024 as compared to $41.7 billion in April-September 2023, in terms of volume, exports soared 121% during the period to 116.4 million tonnes as compared to 52.7 million tonnes in H1, FY24, according to a commerce ministry data.
The government also scrapped the road and infrastructure cess (RIC) levied on export of petrol and diesel from Monday. Initially, the levy was ₹6 per litre on exports of both petrol and aviation turbine fuel (ATF) and ₹13 a litre on diesel. The levy on domestically produced crude was ₹23,250 per tonne. The rates were reviewed every fortnight based on international benchmarks.