Government marginally raises windfall tax on domestic crude oil.
The Union Ministry of finance has increased the windfall tax on the sale of domestic crude oil marginally to ₹3,300 per tonne and has also reintroduced a ₹1.5 per litre special additional excise duty (SAED) on the export of diesel.
For the past two weeks, the SAED on the sale of locally produced crude oil stood at ₹3,200. The duty on the export of diesel was at zero since 1 January.
The revised duties would come into effect from Friday, according to a notification by the department of revenue under the finance ministry. The additional excise duty on the export of petrol and aviation turbine fuel remains at zero.
The marginal increase in the windfall tax on sale of locally produced oil comes at a time when the global oil market is witnessing volatility amid the Red Sea crisis. The April contract of Brent on the Intercontinental Exchange was trading at $81.97 per barrel, 0.45% higher than its previous close, at the time of going to press.
Further, as on 14 February, the Indian crude oil basket, which represents the sour grade (Oman and Dubai average) and sweet grade (Brent Dated) of crude oil processed in Indian refineries, stood at $83.08 a barrel.
The centre first imposed the windfall taxes on the sale of locally produced crude oil with effect from 1 July 2022 as oil exploration and producing companies made heavy profits amid multi-year high crude oil prices post Russia’s invasion of Ukraine. Further, the additional levy on the export of petrol, diesel and jet fuels came in as private refiners were largely selling abroad amid better international prices, instead of the domestic market.
The additional levies are reviewed every fortnight based on average oil prices in the previous two weeks.
Going ahead volatility in the international crude oil prices is expected to continue with the Organization of the Petroleum Exporting Countries anticipating a robust demand in the oil market in 2024 and 2025. However, in a contrasting view, the International Energy Agency (IEA) on Thursday lowered its growth forecast for 204 and said that the global oil demand growth is losing momentum.
The IEA’s monthly report projected the global oil demand to grow by 1.22 million barrels per day (bpd) this year, slightly down from last month’s estimate. Opec earlier this week stuck to its much steeper growth forecast at 2.25 million bpd.
For Official Notification No. 06/2024-Central Excise & Notification No. 07/2024-Central Excise both dated February 15, 2024