Chandigarh, December 6, 2024 (Punjab Khabarnama Bureau)- The central government has made a major decision regarding the windfall tax on ATF, petrol, and diesel. The government has removed the windfall tax that was imposed. As a result, refining companies that export petrol and diesel will no longer have to pay the windfall tax. This means the government has withdrawn the windfall tax on crude products. Finance Minister Nirmala Sitharaman presented the notification in the Lok Sabha regarding this. This decision will benefit oil companies, and they may consider providing relief to the common people as well. Following this news, there has been activity in stocks of companies like RIL, ONGC, and OIL India. Earlier, there were speculations in several media reports about the removal of the windfall tax on crude products. A windfall tax is a type of tax imposed on producers who earn profits above a certain threshold. The tax on fuel exports was imposed based on the margins earned by refining companies from foreign shipments. Typically, these refining companies’ costs differ from the international market prices of crude oil.
When did the government impose the windfall tax?
With fluctuations in Brent crude prices, the windfall tax has also been revised. The central government first imposed the windfall tax on July 1, 2022. Currently, many countries tax the large earnings of energy companies.
In August, the government reduced the windfall tax on crude oil.
Three months ago, the government had lowered the windfall tax on domestically produced crude oil exports. In its regular review, the government reduced the windfall tax from ₹2,100 per metric ton to ₹1,850 per metric ton. This change came into effect from August 31. The government reviews the windfall tax every 15 days. Previously, on August 16, the government had reduced the windfall tax by 54.34%, from ₹4,600 per metric ton to ₹2,100 per metric ton. Accordingly, the government reduced the windfall tax by 59.78% twice in August. On the other hand, the government decided to keep the export duty on diesel, petrol, and aviation turbine fuel (ATF), the fuel used in airplanes, at zero. This means that the exemptions provided to domestic refiners on the export of diesel, petrol, and ATF will remain in place in the future. This will continue to benefit domestic companies that operate refineries and export refined products like diesel, petrol, and ATF to foreign markets.
Summary: The central government removed the windfall tax on petrol, diesel, and ATF exports, benefiting oil companies and possibly consumers. The tax was first imposed in July 2022 and periodically adjusted.