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The seven-month windfall tax on domestically produced crude oil and fuel exports is likely to generate around $25,000 crore in the current fiscal year ending March 31, senior government officials said.
The levy will continue for now as international oil prices have risen again, the government official told PTI.
“As of now, crude oil prices are on the rise again. Therefore for the time being the windfall tax will continue,” CBIC president Vivek Johri told PTI.
Treasury Secretary Sanjay Malhotra said the budget has estimated windfall tax levy in $Rs 25,000 crore in the current fiscal year.
As the geopolitical situation continues to be volatile, Johri said it would be “difficult to predict how long windfall taxes will continue.”
India first imposed windfall taxes on July 1, joining a growing number of nations that tax windfall profits from energy companies. At that time, the export duties of $They charged 6 per liter ($12 per barrel) each on gasoline and ATF, and $13 a liter ($26 a barrel) on diesel.
A tax on windfall profits $23,250 per ton ($40 per barrel) was levied on national crude oil production.
The tax is reviewed every fortnight and the rates are moderated based on international oil prices.
The windfall tax on crude oil produced by companies, such as the Oil and Natural Gas Corporation (ONGC), is currently $1,900 per ton.
The diesel export tax is $5 per liter and that in ATF shipments abroad it is $3.5 a liter.
The gasoline export tax was removed in the first revision.
The government imposes taxes on windfall profits made by oil producers at any price they earn above the $75 per barrel threshold.
The levy on fuel exports is based on cracks or margins that refiners earn on shipments abroad. These margins are primarily a difference between the realized international oil price and cost.
Johri said two rounds of excise duty cuts on gasoline and diesel to cool retail prices have led to a substantial drop in excise collections in the current 2022-23 fiscal year. “Due to tax cuts, the RE is lower than the BE.”
For the current fiscal year, revised estimates set excise tax absorption downward at $3.20 lakh crore against $3.35 lakh crore target in last year’s budget.
For 2023-24, the collection has been set at $3.39 lakh crores.