Windfall Tax: Government lifts windfall tax on petrol-diesel exports

New Delhi| The government abolished the windfall tax on aviation turbine fuel (ATF), crude oil products, petrol and diesel products after several months of deliberations. This step has come into effect with immediate effect. This step of the government will provide relief to oil exporting companies like Reliance and ONGC. This decision may increase their gross refining margin.

Windfall tax is a special tax on domestic crude oil production, introduced in July 2022 to derive revenue from windfall profits of producers following rising global crude oil prices.

Reliance Industries shares were trading in the green at Rs 1,300.05 at 1.04pm following the government’s decision. Apart from this, the government has also withdrawn the Road and Infrastructure Cess (RIC) on export of petrol and diesel. A notification in this regard has also been placed in the Parliament.

In September, the Indian government had announced the abolition of windfall tax on crude oil from Rs 1,850 per tonne in August. Windfall tax on export of diesel and aviation turbine fuel was also abolished.

During the beginning of the Russia-Ukraine war and the West’s sanctions on the Kremlin, oil companies made unprecedented profits due to the surge in crude oil prices. These profits created an environment where oil companies made large, one-off profits. In view of these extraordinary profits, the government had decided to impose windfall tax on domestic crude oil producers and exporters. The move was aimed at generating additional revenue for the government by imposing windfall tax on domestic crude oil producers and exporters.