Govt scraps windfall tax on domestic crude, petrol and diesel exports – haroonabadvital.com

New Delhi:The government on Monday withdrew the windfall tax on domestically produced crude oil and exports of gasoline, diesel and aviation turbine fuel, responding to industry demand after a decline in global oil prices.

The Revenue Department on Monday “canceled” the notifications it had issued on June 30, 2022 imposing windfall tax and the decision took effect “with immediate effect” in the “public interest”, an official said citing the order. “The industry wanted the government to cancel the tax because there was no justification for such duties after global oil prices remained low for several months,” he said, requesting anonymity.

The government imposed an unexpected tax on the oil sector from July 1, 2022 after private refiners significantly reduced domestic supplies of transportation fuels and opted for exports to make huge profits due to the surge in external demand. Days before the decision, the price of Brent crude oil was between $110 and $120 per barrel. Brent crude has been consistently below $80 per barrel since August 2024 and is currently hovering at $72 per barrel.

According to the latest merchandise trade data, lower global oil prices have led to India’s realization per unit of petroleum product exports falling more than two-and-a-half times to $312.50 per tonne in the first half of 2024-25 from around $792 per tonne. In the first half of 2023-2024 despite the strong jump in the volume of shipments.

Underperformance through refined petroleum product exports has been a major drag on India’s overall export performance. While India’s exports of petroleum products fell by more than 12.7% to $36.4 billion in the April-September 2024 period compared to $41.7 billion in the April-September 2023 period, in terms of volume, exports rose by 121% during the period to 116.4 million tons. Compared to 52.7 million tons. One million tons in the first half of fiscal year 2024, according to data from the Ministry of Commerce.

The government also removed road and infrastructure duties imposed on petrol and diesel exports from Monday. First was the tax $6 per liter on gasoline and jet fuel (ATF) exports $13 liters on diesel. The tax was on domestically produced crude oil $23,250 per ton. Prices are reviewed every two weeks based on international standards.