Govt hikes windfall tax on crude oil, reduces tax on diesel and aviation fuel
New Delhi: Amid the wide speculation of a cut in petrol and diesel prices in the country soon, the Centre has announced a hike in the tax on crude oil, while it has subsequently reduced the tax on diesel and aviation turbine fuel or ATF. The special additional excise duty or SAED, has been increased from Rs 1,300 per tonne to Rs 2,300 per tonne, while the SAED on the export of diesel was cut to zero from Re 0.5 per litre earlier. Besides, the ATF has been also slashed to nil from the earlier Re 1 per litre and SAED on export on petrol remains zero as well, according to an official late evening notification on Monday.
The move of the government on the hike in the windfall tax comes just a day after several reports that the government would be slashing the rates of petrol and diesel across the country in 2024, ahead of the upcoming Lok Sabha elections in April-May. It is also learnt that the Union finance ministry has sent a proposal to proposal to the Centre regarding the same, suggesting a price cut of Rs 10 in fuel in the country.
The Centre imposed a windfall tax on crude oil producers in July 2022 and extended the levy on exports of gasoline, diesel and aviation fuel as private refiners in India wanted to sell fuel overseas to make a significant profit from their robust refining margins, instead of selling locally. The windfall tax on crude oil is imposed by governments of different countries when an industry unexpectedly outperforms and generates substantial profits.
When the rates of the global benchmark are increased above $75 per barrel, then the windfall tax is imposed on domestic crude oil. Two years ago, the central government slashed the petrol and diesel prices by Rs 8 and Rs 6 respectively. Earlier, the petrol and diesel prices were also cut in India after they touched a record high amid the spike in crude oil rates globally, hiked due to the Covid pandemic and the Russia-Ukraine war
