Govt Raises Windfall Tax On Domestically Produced Crude Oil By 39%

The Indian government has announced a rise in the windfall tax imposed on domestically produced crude oil. Effective from 4 April, the tax rate will be increased to Rs 6,800 per tonne, up from the previous rate of Rs 4,900 per tonne. 

This adjustment, applied in the form of Special Additional Excise Duty (SAED), is a notable policy shift in the country's energy taxation landscape. The decision to raise the windfall tax comes in the wake of ongoing efforts by the government to regulate the energy sector and ensure fair revenue distribution. 

This move follows a similar adjustment made on 15 March, when the tax on petroleum crude was increased from Rs 4,600 per tonne to Rs 4,900 per tonne.

While the windfall tax on domestically produced crude sees a substantial hike, the export duty on diesel, petrol, and Aviation Turbine Fuel (ATF) remains at zero. This decision underlines the government's strategy to balance domestic consumption needs with international market dynamics, particularly in the context of refining margins and global energy demand.

The imposition of a windfall tax on crude oil producers was initially introduced in July 2022. Since then, the levy has been extended to include exports of gasoline, diesel, and aviation fuel. This extension possibly indicates the government's approach to regulating the energy sector and addressing concerns raised by private refiners seeking to maximize profits by selling fuel overseas rather than domestically.