India Slashes Windfall Tax On Petroleum Crude From Rs 4,100 Per Tonne To Zero

India has slashed the windfall tax on petroleum crude to zero from Rs 4,100 ($50.13) per tonne. The cut will be effective today onwards, a government notification stated, according to a report published in Business Standard.

Earlier in May, the windfall tax on domestic crude oil was slashed to Rs 4,100 per tonne from Rs 6,400 per tonne. Whereas, the government left the windfall tax on petrol, diesel, and aviation turbine fuel (ATF) unchanged at zero, stated the Business Standard report.

It is worth mentioning that companies from the oil refinery and producer space tend to benefit when windfall tax on petroleum crude is cut. We might see good action in stocks like Reliance Industries and ONGC. The stocks have been subdued and might see some buying support in trade today. Shares of Reliance Industries last closed at Rs 2488 on the BSE, while ONGC ended trade at Rs 165.60 on Monday.

Previously, the government announced the reimposition of the windfall profit tax on domestically produced oil from zero to Rs 6,400 per tonne. The government also scrapped the export duty on diesel.

Based on the average oil prices in the last two weeks, the tax rates are reviewed every 15 days.

The windfall profit tax is calculated by taking away any price that the producers are being paid above a set limit, added the Business Standard report.

India, in July 2022, joined a growing number of nations that tax the super-normal profits of energy companies. It had imposed the windfall tax on crude oil producers and extended the levy on exports of gasoline, diesel, and ATF after private refiners wanted to make gains from robust refining margins in overseas markets.