India Cuts Windfall Tax On Diesel And Crude Oil Exports

In a significant move aimed at fostering economic resilience, the Indian government has announced a reduction in the windfall tax on diesel and crude oil, according to a recent notification.

The decision, effective immediately, is expected to have far-reaching implications for both producers and consumers in the energy sector.

As reported by Economic Times, the windfall tax on crude oil has been slashed from Rs 5,000 per tonne to Rs 1,300 per tonne, providing relief to producers grappling with financial burdens,

Simultaneously, the windfall tax on diesel sees a reduction from Rs 1 per litre to Rs 0.5 per litre, offering a reprieve to consumers who have been contending with escalating fuel prices.

In a nuanced adjustment, the windfall tax on aviation turbine fuel has been increased to 1 rupee per litre from zero.

The windfall tax measures were initially introduced in July 2022, primarily targeting crude oil producers.

The levy was later extended to include exports of petrol, diesel, and aviation fuel.

This extension was driven by the intention to regulate the behaviour of private refiners, preventing them from prioritising overseas sales to capitalise on robust refining margins rather than serving the domestic market.

The move is anticipated to contribute positively to the overall economic landscape, promoting stability and resilience amid evolving market dynamics.