The government informs of the complete collection of the windfall tax on petroleum crude for the fifth time in the last four months via a notification to the corresponding ministry. For comparison, the revised rate of Rs 6,800 as compared to that of Rs 4,900 previously. The above decision is triggered by the government’s drive to monitor the oil sales profits earned by the oil companies, given the changes in oil prices around the globe.
On the other hand, a Reuters report citing a revised windfall tax regime equipped with a built-in mechanism to safeguard the consumer from sudden oil price surges has continued to function at zero for diesel and aviation turbine fuel (ATF), revealing the status quo for both the products. The week’s latest move of the petroleum crude windfall tax, which was increased by the government from Rs 4,600 to Rs 4,900, is the second such increase in March.
The levy was announced in the digital economy in August 2022 and applied to crude oil framing for Indians. However, the limitation was further removed on oil products as well; the gasoline, diesel, and aviation fuel exports took a toll, too. This directive prevented private refiners from favouring the sales of the product exports beyond the margin that was in the domestic market. There is a much higher margin in foreign markets, and now private refiners are split to do their business.
This step came in reaction to the high crude oil price surge created by geopolitical events of the Russian Federation (Russia) hitting Ukraine. This has caused the UK oil production firms to earn a lot, hence the introduction of windfall tax in 2022.
To instigate windfall tax, the global benchmark price exceeding $75 per barrel of crude oil is often used as a triggering point for domestic crude oil. The duty operates on diesel, ATF, and petrol exports if the Valuation over the product margin is higher than $20 per barrel.
TBG is realized via Special Additional Excise Duty (SAED) levies on diesel, petrol, and ATF exports, as per the official order. The SAED on these exports remains zero.
And Wednesday, October 21, 2020, Brent crude oil price, this benchmark for global crude oil, saw a slight increase to USD 88.68 per barrel, or 0.37 per cent.
