The government hiked windfall tax on domestically produced crude oil to ₹6,000 per tonne, from ₹3,250 per tonne, with effect from July 2, PTI reported.
The tax, levied in the form of Special Additional Excise Duty (SAED), has been kept at ‘nil’ on the export of diesel, petrol and jet fuel or air turbine fuel (ATF), it added.
India started the tax on crude oil producers and on exports of gasoline, diesel and ATF in July 2022 to regulate private refiners who wanted to sell fuel overseas instead of locally in a bid to gain from robust refining margins.
In July 2022, the Indian government introduced a windfall tax targeting crude oil producers. Subsequently, this tax was expanded to cover exports of gasoline, diesel, and ATF.
This policy aims to regulate private refiners and deter them from capitalising on elevated global prices by selling these fuels abroad, instead prioritizing domestic market supply.
The Finance Ministry adjusts the windfall tax rate every two weeks, based on average oil prices of the previous two weeks.
Global oil traded near a two-month high on July 1 after breaking out of its recent trading range due to tensions in the Middle East amid Israel's military conflict and concerns over the hurricane season as Beryl barrels over the Caribbean, according to a Bloomberg report.
Brent crude traded near $87 a barrel after rising on July 1, while West Texas Intermediate was above $83.
“The breakout of the recent range to a new higher high reinforces the near-term upward trend. That could leave buyers eyeing for a retest of the April 2024 high next at the key $90 level for Brent,” said Yeap Jun Rong, market strategist for IG Asia Pte. told Bloomberg.
(With inputs from PTI and Bloomberg)
