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The Centre has slashed special additional excise duty, commonly known as windfall tax, on domestically produced crude oil, to nil from Rs 3,500 a tonne, effective from April 4, according to a notification on Tuesday.
Further, it has reduced the levy on diesel to 50 paise per litre from Rs 1.
This means crude oil, aviation turbine fuel (ATF), and petrol will not attract windfall tax.
The move is expected to give significant relief to top fuel exporters like Reliance Industries, and oil explorers like Oil and Natural Gas Corporation (ONGC).
The levy was cut in line with the softening trend seen in international oil prices in the second half of March. However, oil prices have shot up this month following a surprise cut in production announced by the producers’ cartel OPEC and its allies like Russia. Commenting on the move, Sabyasachi Majumdar, senior vice-president and group head — corporate ratings, ICRA Limited, said there was a moderation in crude oil prices closer to the last revision in special additional excise duty (SAED) on March 21, 2023, hence the reduction in the duty. “However, crude oil prices have jumped since the OPEC+ announcement of additional production cuts of 1.16 million barrels per day. Hence, the SAED can be expected to increase in the next revision if the crude prices remain elevated,” he said. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
