Center cuts windfall tax on oil to ₹10,500 per ton

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NEW DELHI : The government on Friday cut the windfall tax on domestic crude oil sales by a sharp 21% to 10,500 per tonne, in line with the decline in global oil prices over the past two weeks, an official order found.

For more than two weeks, the sale of crude oil produced in India was subject to an additional tax of 13,300 per ton.

The Center reduced the special additional excise duty on the export of aviation turbine fuel from 9 a liter to 5 litres. The cess remains unchanged.

The government also lowered the special additional excise duty on diesel exports 12 liters per liter 8.5 litres. The changes will take effect from Saturday.

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Crude oil prices have fallen in the past two weeks amid demand concerns from China as the country witnesses an increase in Covid-19 cases and new lockdowns. China is one of the largest oil importers in the world.

Currently, the November contract of Brent futures on the Intercontinental Exchange currently stands at $91.62 a barrel. It is down about 13% from $105 a barrel on August 31, when the latest revision was announced.

Furthermore, the anticipation of a sharp increase in the rake by the US Federal Reserve has also supported prices. Analysts at Nomura recently estimated that the Federal Open Market Committee, the Federal Reserve’s policy-making committee, is likely to raise its short-term interest rate target by a full percentage point at its policy meeting next week due to the emergence of upward inflation risks. .

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The Federal Open Market Committee will announce its policy decision on September 20-21. The rate hike by the US Fed is likely to affect other major central banks, including the European Central Bank, slowing growth rates, ultimately impacting crude oil demand.

However, the energy risks of the conflict between Russia and Ukraine would keep the market volatile.

On July 1, Centrum has an export right of 6 per liter on petrol and ATF and a 13 liters of excise duty on diesel exports. A windfall from 23,250 per tonne was imposed on the sale of domestic crude oil.

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The taxes were first revised on July 20. Finance Minister Tarun Bajaj had said after the tax was imposed on July 1, it would be reviewed every 15 days, taking into account, among other things, the exchange rate and global crude oil prices.

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