Government Slashes Windfall Tax On Petroleum Products
In a significant development meant to provide relief to consumers and companies, the government has announced a cut in windfall taxes on important petroleum products, including crude oil, aviation turbine fuel (ATF), and diesel. The country's fiscal policy will alter with the implementation of these tax cuts tomorrow.
The windfall tax on petroleum crude would now only cost Rs 9,050 per tonne instead of Rs 12,200 per tonne, as decided by the government. The decision is anticipated to have a significant impact on petroleum product pricing, which has an immediate impact on a variety of sectors and daily life.
The government also reduced the windfall tax on ATF from Rs 3.50 per litre to Rs 1 per litre and on diesel from Rs 5 per litre to Rs 4 per litre, in addition to the reduction in the tax on crude oil. These adjustments should lessen the financial strain on the aviation and transportation industries.
Notably, the Finance Ministry just increased the windfall tax on domestically produced crude oil to Rs 12,100 per tonne last month. The decision was met with conflicting responses and worries about rising fuel prices.
On 30 September, the new tax levies will go into effect, giving customers struggling with the rising cost of living much-needed respite.
The government had initially introduced windfall taxes on locally produced crude oil on 1 July 2022, in response to substantial profits earned by oil exploration and production companies during a period of elevated global crude oil prices, driven in part by geopolitical events such as Russia's invasion of Ukraine.
In the global context, international oil prices continued to exhibit volatility. At the time of writing this article, Brent futures rose to USD 90.39 per barrel, while US West Texas Intermediate (WTI) crude increased to USD 87.35 per barrel. These fluctuations reflect the complex dynamics of the international oil market.
On the Multi Commodity Exchange (MCX), crude oil futures with an expiry date of 19 October experienced a 0.7 per cent decrease, trading at Rs 7,188 per barrel. The market witnessed fluctuations between Rs 7,132 and Rs 7,528 per barrel during the session, in contrast to the previous close at Rs 7,239 per barrel.
