India increases windfall tax on domestic crude, cuts levy on export of diesel and ATF

Notably, a windfall tax is a higher tax levied by the government on specific industries when they experience unexpected and above-average profits. So, as crude prices cross 90 dollars a barrel, the government has hiked windfall tax on oil companies to tax higher profits.

Crude oil pumped out of the ground and from below the seabed is refined and converted into fuels like petrol, diesel and aviation turbine fuel (ATF).

India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax super-normal profits of energy companies. At that time, export duties of Rs 6 per litre ($12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel.

The government levies tax on windfall profits made by oil producers on any price they get above a threshold of $75 per barrel. The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost.

s crude prices cross 90 dollars a barrel, Govt hikes windfall tax on oil companies to tax higher profits