Govt Slashes Windfall Tax On Crude Oil, New Rates Effective From Aug 17

The Union Government slashed the windfall tax on crude petroleum on August 16 and the new tax rates will get effective beginning from August 17, 2024. The special additional excise duty on crude petroleum has been reduced from Rs 4600/tonne to Rs 2100/tonne. Earlier, the government increased the windfall tax on July 15.

Earlier this year on July 31, Special additional excise duty (SAED) or windfall tax was reduced by 34.3% to Rs 4600/tonne on crude oil from Rs 7000. Meanwhile, tax on ATF and diesel did not witness any change and left unchanged at nil.

Earlier in July 2022, the Union Government introduced windfall tax in order to target crude oil producers. After some time, the tax was expanded in order to include ATF, gasoline, and aviation fuel in an effort to prevent private refiners from selling these fuels overseas at inflated prices.

It is worth mentioning here that tax rates are revised after every two weeks on the basis of movement in global crude and product prices. Average oil prices from the previous two weeks are also taken into consideration when tax rates are revised.

A windfall tax is generally imposed by governments when an industry unpredictably earns large profits mainly due to an unprecedented event. Earlier on Friday, oil prices slipped by approximately 2%. Brent crude stood below USD 80 a barrel amid demand apprehensions from China.