: Govt slaps Rs 66,000 cr windfall tax on crude oil production #finance #StockMarketNEWS #Business Press Trust of India New Delhi The government on Friday slapped an export tax on petrol and diesel

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Govt slaps Rs 66,000 cr windfall tax on crude oil production #finance #StockMarketNEWS #Business
Press Trust of India

New Delhi

The government on Friday slapped an export tax on petrol and diesel after some refineries made “phenomenal profits�? shipping overseas at the cost of domestic supplies, and imposed a `66,000 crore windfall tax on crude oilproduced locally.

A `6 per litre tax on export of petrol and aviation turbine fuel (ATF) and `13 per litre tax on export of diesel is effective from July 1, finance ministry notifications showed.

Additionally, a `23,250 per tonne tax was levied on crude oil produced domestically, which at last year’s production level of close to 29 million tonnes translates into annual revenue of `66,000 crore tothe government.

Assuming the trend of exporting 5. 7 million tonnes of diesel and 2. 5 million tonnes of petrol in the first two months of the fiscal that began in April 2022 continues for the full fiscal, the revenue from the windfall tax on crude and the export levy should neutralise the `1 lakh crore hit the government took when it rolled back the pandemic-era hike in excise duty onpetrol and diesel.

The export tax is to deter companies such as Reliance Industries and Rosneft-based Nayara Energy from preferring overseas markets over domestic supplies. Giving out reasons for the introduction of the new levies, Finance Minister Nirmala Sitharaman said “phenomenal profits�? earned from abnormal prices that refiners earned from shipping overseas led to the new taxes.

“We don’t grudge people earning profits,�? she said. “But if oil is not being available (at petrol pumps) and they are being exported Exported with such phenomenal profits. We need at least some of it for our own citizens and that is why we have taken this twin-pronged approach. �?

“It is not to discourage exports, it is not to discourage India as a refining hub. It is certainly not against profit earning, but extraordinary times do require some such steps,�? Sitharaman said.

The windfall tax on oil producers was triggered by Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) reporting bumper profits in the March quarter (when international prices soared to a near 14-year high of 9 per barrel) and record earnings in 2021-22.

ONGC reported a record net profit of `40,306 crore on a revenue of `1,10,345 crore in the 2021-22 fiscal. OIL posted `3,887. 31 crore net profit in the fiscal. Vedanta’s Cairn Oil & Gas, which is India’s second-largest oil producer, too had bumper earnings.

The new levy plus the oil industry development cess and royalty the producers currently pay will take the total incidence of taxation to about 60% of the oil price.