The Central Board of Indirect Taxes and Customs (CBIC) announced a reduction in windfall gains tax on domestically produced crude oil from Rs. 8,400 per tonne to Rs. 5,700 per tonne, effective May 16, 2024. This move aims to alleviate the burden on energy companies amidst fluctuations in international crude oil prices.
Revision of Tax Rates
- Earlier Rates:
- On May 1, the windfall tax was revised to Rs. 8,400 per tonne, down from Rs. 9,600 per tonne.
- On April 16, the tax was raised to Rs. 9,600 per tonne from Rs. 6,800 per tonne due to increasing crude oil prices internationally.
Context of Windfall Profit Taxes
- Initiation:
- India introduced windfall profit taxes on July 1, 2022, in line with several other nations.
- Purpose:
- These taxes are imposed on energy companies to mitigate extraordinary profits.
- Review Mechanism:
- Tax rates are reviewed fortnightly based on international crude oil prices over the previous two weeks.
Impact on Export Duty
- Continuation of Nil Duty:
- Export duty on petrol, diesel, and aviation turbine fuel (ATF) remains unchanged at nil.
- Significance:
- This decision supports the stability of fuel prices and facilitates trade.
The reduction in windfall gains tax demonstrates the government’s commitment to maintaining a balance between industry sustainability and fiscal responsibility amidst dynamic global market conditions.
