“India Raises Windfall Tax on Petroleum Crude to ₹3,200 Per Tonne, Keeps Diesel and Aviation Fuel Untouched”

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In a recent move, India has announced an increase in the windfall tax on petroleum crude, raising it to ₹3,200 per tonne from the previous ₹1,700, effective from Saturday. However, the windfall tax on diesel and aviation turbine fuel remains unchanged at zero, according to a statement released by the government on Friday.

This decision comes after a previous reduction in the windfall tax on petroleum crude from ₹2,300 per tonne to ₹1,700 per tonne on January 16. The government’s adjustment in the windfall tax aims to balance revenue considerations and market dynamics in the petroleum sector.

Since July 2022, India has been imposing a windfall tax on crude oil producers, concurrently extending the levy to exports of gasoline, diesel, and aviation fuel. This move was in response to private refiners seeking to capitalize on robust refining margins by selling fuel overseas instead of focusing on the domestic market.

The government, in its efforts to adapt to changing economic conditions and global oil dynamics, revises the windfall tax every two weeks. The tax modifications play a crucial role in aligning government revenue streams with the evolving landscape of the petroleum industry.

While the windfall tax on petroleum crude has seen an increase, the decision to maintain the tax on diesel and aviation turbine fuel at zero reflects a nuanced approach by the government to balance the economic impact on various sectors. This move is expected to influence the behavior of petroleum producers and refiners, encouraging a strategic alignment with the national economic objectives.

As India continues to navigate the complex terrain of energy pricing and taxation, the government’s dynamic approach to windfall taxes demonstrates its commitment to fostering a resilient and responsive economic framework in the face of evolving global and domestic challenges in the petroleum sector.

Sources By Agencies