Govt Reduces Windfall Tax On Crude Oil By Rs 1,300 To Rs 5,000 Per Tonne

Centre on Friday reduced the windfall tax on crude petroleum by Rs 1,300 per tonne to Rs 5,000 per tonne from Rs 6,300 a tonne. The government has also cut the levy on jet fuel to Rs 1.06 lakh per kilo litre (kL) from Rs 1.11 lakh/kL.

The windfall tax is revised every fortnight depending upon the movements of average oil prices in the previous two weeks. Currently, Crude oil prices are trading at around $82 a barrel.

In the previous fortnightly review on November 16, the government had lowered the windfall tax on crude petroleum to Rs 6,300 per tonne to Rs 9,800 per tonne, while for diesel, it was halved to Rs 1 per litre from Rs 2 per litre. The levy on the export of jet fuel and petrol was left unchanged at zero.

The union government first levied a windfall tax in July 2022 in the backdrop of soaring crude oil prices. A windfall tax is imposed on domestic crude oil if rates of the global benchmark rise above $75/barrel. Export of diesel, ATF, and petrol attract the levy if product cracks (or margins) surpass $20 per barrel.

Oil prices extended losses in early Asian trade on Friday after OPEC+ allies agreed to voluntarily cut oil output for the first quarter of next year that fell short of market expectations.

According to Reuters, Brent crude futures for February slipped 0.2%, to $80.72 per barrel by 0005 GMT, while US West Texas Intermediate crude futures were down 0.2%, to $75.84.