Central Government Hikes Windfall Tax On Crude Petrolium

The central government has decided to increase the windfall tax on crude petroleum to Rs. 2,300 per ton from Rs. 1300 per ton, eliminating a tax on diesel and jet fuel, which earlier stood at Rs. 0.5 per liter and Rs. 1, respectively.

The windfall tax is changed every two weeks according to the fluctuations in international crude and product prices. Crude oil prices currently stand at $78.13 per barrel.

India imposed a windfall tax on the extra profit earned by oil companies in July 2022, when Russia launched an attack on Ukraine with the crude price in the international market surging exorbitantly. In this scenario, Indian companies incurred heavy profits from exports.

On December 1, the international crude oil price continued its downward trend despite the Organization of Petroleum Exporting Countries and their allies (OPEC+) voluntarily agreeing to cut nearly 1 million barrels a day by early 2024. According to the report, the move failed to attract traders, who are skeptical about the organization’s ability to cut targeted supply.

The benchmark Brent crude currently trades at $78.13 a barrel, down 1.14 percent on January 2, while West Texas Intermediate (WTI) increased 1.14 percent to $72.64.