New Delhi: The Central Government on Wednesday slashed the windfall tax on petrol, diesel, jet fuel and crude oil following a decline in international rates.
It scrapped the Rs 6 a litre tax on export of petrol and reduced the same on ATF from Rs 6 a litre to Rs 4 a litre. Besides, the tax on diesel has been reduced from Rs 13 per litre to Rs 11 per litre, according to Finance Ministry notifications.
Further, the Rs 23,250 per tonne additional tax on crude oil produced domestically has been cut to Rs 17,000 per tonne.
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Thursday 09 Jan. 2025
The Finance Ministry had said that these will be reviewed every fortnight and a decision will be taken. As the prices of crude and petroleum products in the global market have softened and supply of petrol and diesel too improved in the domestic market, the government has revised levies.
In a set of four notifications, the Central Board of Indirect Taxes & Custom (CBIC) says these seek “to reduce the Road and Infrastructure Cess on export of petrol, to exempt the excisable goods, namely petrol, diesel and Aviation Turbine Fuel from Special Additional Excise Duty and Road and Infrastructure Cess when exported from units located in the Special Economic Zones (SEZ), to reduce the Special Additional Excise Duty on production of petroleum crude and export of Aviation Turbine fuel and to reduce the Special Additional Excise Duty on exports of petrol and diesel.”
The decision to impose tax on windfall gain was taken after a sharp rise in crude prices in recent months. The domestic crude producers sell crude to domestic refineries at international parity prices. As a result, the domestic crude producers are making windfall gains. Taking this into account, a cess was imposed on crude. Import of crude would not be subject to this cess.
The government has already clarified that this cess will have no adverse impact, whatsoever, on domestic petroleum products/fuel prices. Further, small producers, whose annual production of crude in the preceding financial year is less than 2 million barrels are not required to pay this cess. Also, to incentivise an additional production over preceding year, no cess has been imposed on such quantity of crude that is produced in excess of last year production by a crude producer.
“This measure would not impact crude prices or the prices of petroleum products and fuels,” the Finance Ministry said.
On making export of petrol and diesel costlier, the Ministry had said while crude prices have increased sharply in recent months, the prices of diesel and petrol have shown a sharper increase. The refiners export these products at globally prevailing prices, which are very high. As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market, it said while justifying cesses imposed on petrol and diesel. Now, this will continue on diesel as that has very high consumption.
“These measures would not have any adverse impact on domestic retail prices of diesel and petrol. Thus, domestic retail prices would remain unchanged. At the same time these measures will ensure domestic availability of the petroleum products,” the ministry had said.
