In a recent development, India has implemented changes to its tax structure for petroleum products. The government, through an official notification, has raised the windfall tax on crude oil while simultaneously reducing the tax on diesel and aviation turbine fuel.
The windfall tax on petroleum crude oil has been increased to 2,300 Indian rupees ($27.63) per ton, up from the previous rate of 1,300 rupees. This adjustment aims to address fiscal considerations related to the production and export of crude oil.
In a significant move, the government has eliminated the tax on diesel, previously set at 0.5 rupee per liter. Additionally, the one rupee per liter windfall tax on aviation fuel has also been removed. These changes are part of a broader strategy to optimize the taxation structure in the petroleum sector.
The windfall tax on crude oil was initially introduced in July 2022, primarily targeting crude oil producers. The levy was extended to cover exports of gasoline, diesel, and aviation fuel. This extension became necessary as private refiners expressed interest in exporting fuel to capitalize on favorable refining margins instead of selling domestically.