Tax hike on diesel

The central government increased the windfall profit tax on diesel and jet fuel exports on Wednesday (ATF). In addition, the windfall gains tax on domestically produced crude oil was increased to reflect the escalation in world prices. The updated prices are valid as of right now (1 September). According to a Ministry of Finance notification, the government increased the windfall profit tax at the fourth fortnightly review from Rs 7 per litre for diesel exports to Rs 13.5 per litre and from Rs 2 per litre for aviation turbine fuel (ATF) exports. The tax on crude oil produced domestically has also increased, going from Rs 13,000 to Rs 13,300 per tonne.

Every two weeks, the government evaluates the windfall gains tax based on the price of crude oil around the world. The windfall taxes were first enacted by the Indian government in July, joining a small group of countries that tax supernormal windfall gains accruing to oil companies as a result of rising energy prices. The government previously claimed that the main reason for enforcing the windfall tax is to maintain domestic supplies because refiners preferred to export rather than supply to meet local demands.

By Subhechcha Ganguly