India hikes windfall tax on crude, eliminates tax on diesel and ATF
03 Jan 2024
Government of India on Monday announced an increase in the windfall tax levied on locally-produced crude petroleum while doing away with the tax on diesel and aviation turbine fuel (ATF).
The special additional excise duty (SAED) on crude oil now stands at Rs2,300 per tonne, up from Rs1,300 a tonne. However, the government has done away with the Rs0.5 per litre tax on diesel and the Re1 per litre tax on aviation turbine fuel while keeping nil duty on export of petrol.
The duty hike comes after a deeper reduction in SAED (or windfall tax) from Rs5,000 per tonne to Rs1,300 per tonne on 18 December 2023. Duty on export of diesel was also cut, while that on ATF was hiked
The special additional excise duty on domestic crude oil was first introduced in July 2022 and extended the levy to export of gasoline, diesel, and aviation fuel as private refiners wanted to sell fuel overseas to make profit from selling abroad.
India first introduced the special additional excise duty on petroleum, with a Rs6 per litre levy on export of petrol and ATF and a Rs13 per litre impost on diesel exports.
SAED or windfall tax is levied on domestic crude oil if international prices of benchmark crudes rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy when refining margins rise above $20 per barrel.
Government reviews the special additional excise duty on crude oil and its products on a fortnightly basis, on the basis of average oil prices in the previous two weeks.
The international prices of crude petroleum currently stands at $70-80 a barrel.
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