India increases windfall tax on petroleum crude

New Delhi [India], July 2 (ANI): The central government has raised the windfall tax on petroleum crude to Rs 6,000 per tonne from Rs 3,250 earlier.

This revision in special tax would be effective from July 2, according to an official gazette notification issued on Monday.

The government had around a fortnight ago reduced the windfall tax on petroleum crude to Rs 3,250 from Rs 5,200.

International crude oil is currently trading at nearly a two-month high. Brent crude traded near USD 87 a barrel after rising Monday, while West Texas Intermediate was above USD 83, due to continued geopolitical crisis in the Middle East.

“Oil prices might remain buoyed on supply concerns in the event of an escalation in the war,” said Kaynat Chainwala, AVP-Commodity Research, Kotak Securities.

The windfall tax is typically relooked every two weeks. The tax, which is revised every fortnight, remains unchanged at zero for diesel, petrol, and aviation turbine fuel.

A tax levied on an unforeseen or unexpectedly large profit is called a windfall tax.

India started the windfall tax on crude oil producers and on exports of gasoline, diesel and the aviation fuel in July 2022, to regulate private refiners who wanted to sell fuel overseas instead of locally, to gain from firm refining margins.