The government has hiked the windfall profit tax on the export of diesel to Rs 13.5 per litre and on jet fuel exports to Rs 9 a litre, besides raising the levy on domestically-produced crude oil in line with the hardening of global prices. At the fourth fortnightly review, the government raised the windfall profit tax on the export of diesel to Rs 13.5 per litre from Rs 7 per litre.
The tax on Aviation Turbine Fuel (ATF) exports too has been hiked to Rs 9 from Rs 2 per litre with effect from September 1, according to a finance ministry notification issued late Wednesday night. Alongside, the tax on domestically-produced crude oil too has been hiked to Rs 13,300 per tonne from Rs 13,000.
The tax on exports has been raised as margins rose, while the levy on domestically-produced oil was increased marginally on slight changes in international oil prices and on expectations of a price rise on hopes of a production cut by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies.
India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies.
But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners. On July 1, export duties of Rs 6 per litre (USD 12 per barrel) were levied on petrol and ATF and a Rs 13 a litre tax on the export of diesel (USD 26 a barrel). A Rs 23,250 per tonne windfall profit tax on domestic crude production (USD 40 per barrel) was also levied.
Thereafter, in the first fortnightly review on July 20, the Rs 6 a litre export duty on petrol was scrapped and the tax on the export of diesel and jet fuel (ATF) was cut by Rs 2 per litre each to Rs 11 and Rs 4 respectively. The tax on domestically-produced crude was also cut to Rs 17,000 per tonne.
On August 2, the export tax on diesel was cut to Rs 5 a litre and that on ATF scrapped, following a drop in refinery cracks or margins. But the levy on domestically-produced crude oil was raised to Rs 17,750 per tonne, in line with a marginal increase in international crude prices.
On August 19, the export tax on diesel was hiked to Rs 7 a litre, while a Rs 2 per litre tax on ATF was brought back. The levy on domestic crude oil output was cut to Rs 13,300 per tonne, in line with the softening of crude prices. At the fourth fortnightly review on August 31, the taxes on diesel and ATF exports as also on domestically-produced crude oil have been raised. Global Brent crude oil prices were hovering around USD 105 a barrel, against USD 95 per barrel a fortnight ago.