A timeline of windfall gains tax implementation in India

According to an official announcement, the Central Government has reduced the surprise profit tax on diesel exports to a historic low of $0.5 per liter and have completely eliminated this for ATF or jet fuel. However, taxes on domestically produced crude oil have been slightly increased.

According to media reports, the Windfall tax is an excise tax imposed on domestic crude oil producers to offset the extra profits they make due to high global crude oil prices.

According to a Reuters report, India, the world’s third-biggest oil consumer, imposed a surprise tax on refined fuel exports last year and required companies to sell the equivalent of 50 percent of its gasoline exports. exports and 30% of their diesel exports. domestic for the current financial year to March 31.

New Delhi has issued rare restrictions after private refiners Reliance Industries and Nayara Energy, India’s main buyers of discounted Russian supplies, began reaping large profits by way to sharply increase fuel exports instead of selling domestically.

At the time of execution, crude oil is priced at $113/barrel. Currently, the wind tax on crude oil has been reduced from Rs. 23,250 per tonne in July 2022 to Rs. 3,500 per tonne as of March 21, 2023, reflecting the trend of Brent Crude Oil prices.

The worsening state of the global banking system caused benchmark US Brent crude to fall to $72 a barrel on March 16.

The downtrend was fueled by the failure of Silicon Valley Bank (SVB), which led to the collapse of Signature Bank and other major financial institutions such as Silvergate Capital and Credit Suisse.

Earlier this month, the central government unexpectedly raised taxes on domestically produced crude from Rs. 4350 per ton to Rs. 4400 per ton. At the same time, the government reduced the diesel export tax to Rs. 0.5 per liter and completely eliminated for ATF.

Meanwhile, this tax is updated every two weeks by the central government and its rate is adjusted based on current crude oil prices and refining spreads.

In July last year, the Indian government enforced this tax on crude oil producers and exporters of gasoline, diesel and aviation fuels in response to private refiners seeking a market. abroad to benefit from high refining margins instead of selling at lower prices at home.

ONE $An expected profit tax of 23,250 per ton ($40 per barrel) on domestic crude oil production also applies. The petroleum export tax was eliminated in the first review.

Reliance Industries Ltd, which operates the world’s largest single-site refining complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are the main fuel exporters in the country.

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