Centre planning to further cut windfall tax on crude, diesel: Report

Amid a recent fall in global oil prices and refining spreads, the central government is planning to further cut windfall taxes on locally produced crude and export of diesel, Financial Express reported Thursday. The Centre's move will benefit oil producers like ONGC and Vedanta Ltd.

 

The government is expected to review the new taxes, imposed on July 1, for the third time soon, FE reported quoting sources. 

 

On July 1, export duties of Rs 6 per litre ($12 per barrel) were levied on petrol and ATF and a Rs 13 a litre tax on the export of diesel ($26 a barrel). The government levied Rs 23,250 per tonne windfall tax on domestic crude production ($40 per barrel) to rein in inflation and ensure adequate local supply. 

Also Read: Centre garners Rs 3,000 crore from windfall tax on oil and gas firms

 

However, in its first review meeting on July 20, the Centre reduced tax on domestically produced crude to Rs 17,000 per tonne. The government had also scrapped the export duty of Rs 6/litre on petrol and reduced the taxes on diesel export and ATF by Rs 2 per litre, each to Rs 11 and Rs 4, respectively.

 

In its second review meeting on August 2, the central government increased the tax on crude export to Rs Rs 17,750 a tonne and limited the windfall tax on diesel shipments to just Rs 5 per litre. Meanwhile, the tax on ATF was removed.

 

In Wednesday's intraday trade, Brent crude prices fell to $91.51, the lowest since February. At the last review meeting, the crude oil prices were around $100-103 per barrel. 

 

The Centre will capture the decline of oil prices from August 1 to 15 in the third review on windfall taxes.