Second blow to oil companies in two weeks, windfall tax imposed on crude petroleum of Rs 7100

For the second time in two weeks, the Finance Ministry has increased the tax on petroleum companies. Earlier, the government had imposed a windfall tax on the export and production of crude oil, which has now increased to Rs 7,100 per tonne.

The central government has given a blow to the petroleum companies for the second time in a row. For the second time in two weeks, the government has increased the windfall tax on crude petroleum for the second time. According to the notification of the Ministry of Finance, the Government of India on Monday increased the windfall tax on crude petroleum from Rs 4,250 per tonne to Rs 7,100 per tonne with effect from August 15.

Along with crude petroleum, there will also be an increase in Special Additional Excise Duty i.e. SAED on diesel. It has been said in the notification that it will be increased from Rs 1 per liter at present to Rs 5.50 per litre. The notification further states that from August 15, a fee of Rs 2 per liter will be imposed on jet fuel or ATF. Currently, there is no SAED on jet fuel. SAED on petrol will remain zero, just like the windfall tax was increased last time.

Last time there was so much increase

Earlier this month, the government increased the windfall tax on crude petroleum from Rs 1,600 to Rs 4,250 per tonne from August 1. The latest hike has come into effect from August 15. India first imposed windfall tax on July 1, 2022. It taxed crude oil producers and raised levies on exports of gasoline, diesel and ATF.

After which India joined the number of countries that tax petroleum companies on super ordinary profits. While a duty was imposed on exports of petrol, diesel and jet fuel ATF, a Special Additional Excise Duty (SAED) was imposed on locally produced crude oil. The government reviews the windfall tax every 15 days. The last change was seen on August 1.

Why is windfall tax levied?

The central government imposes a windfall tax on super-normal profits of oil producers and fuel exporters. In fact, the margin on fuel keeps on fluctuating in the international market. Constant changes are also seen in the prices of crude oil in the international market. Because of which it is reviewed every 15 days and it is seen how much profit the oil companies are making. On the same basis, the rate of windfall tax is decided. The effect of this tax is seen on oil companies like Reliance.