Government slashes windfall tax on domestic refineries

The windfall tax on crude oil was slashed from Rs 23,250/tonne to Rs 17,000/tonne. The export duty on diesel was cut from Rs 13/litre to Rs 10/litre and from Rs 6/litre to Rs 4/litre. The export duty on petrol was entirely scrapped.

The new rates will be effective from Wednesday, July 20.

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RS Sharma, former chairman and managing director of Oil and Natural Gas Corporation, told CNBC-TV18 that the cut in windfall tax is a welcome move.

He added that ad hoc levy of taxes continues to be an issue. According to Sharma, there is no case for gas to be brought under windfall tax.

In the notification, the Central Government said, "on being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods, when exported from units located in the Special Economic Zone (SEZ)."

The government had earlier on July 1 imposed a Rs 6 per litre tax on the export of petrol and aviation turbine fuel (ATF) and a Rs 13 per litre tax on the export of diesel. Additionally, it levied a Rs 23,250 per tonne additional tax on crude oil produced domestically.

The export tax was imposed after oil refiners made profits exporting fuel to deficit regions such as Europe in the aftermath of Russia's invasion of Ukraine. Some media reports suggested that few oil companies processed Russian crude oil available at a discount after the ban by West.