India has raised windfall tax on petroleum, crude oil and aviation turbine fuel (ATF), the raised tax on ATF will now be INR 4.5 per litre from INR 1.5, as per the Indian government order dated January 2, 2023. India has been buying Russian crude barrels at well below a $60 price cap agreed by the West. The windfall tax on crude oil is raised to $25.38 per tonne from $20.55.
In July 2022, India imposed the windfall tax on crude oil producers and levies on exports of gasoline, diesel and aviation fuel after private refiners sought overseas markets to gain from robust refining margins, instead of selling at lower-than-market rates in the country.
The government levies tax on windfall profits made by oil producers on any price they get above a threshold of $75-76 per barrel.
Earlier, after the decline in the global oil prices, the government had slashed the windfall profit tax levied on domestically-produced crude oil as well as on export of diesel and ATF.
Crude oil pumped out of the ground and from below seabed is refined and converted into fuel like petrol, diesel and aviation turbine fuel (ATF).
India first imposed windfall profit taxes on July 1, 2022 joining a growing number of nations that tax super normal profits of energy companies. At that time, export duties of $12 per barrel each were levied on petrol and ATF and $26 a barrel on diesel.
The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.