Steam rises from a crude oil refinery in Kochi, Kerala. File (representation image) | Photo credit: AP
The government has increased the windfall tax levied on locally produced crude oil as well as the export of diesel and ATF in line with firming international oil prices, according to an official order.
The tax on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been raised to ₹5,050 per ton from ₹1,900 per ton, according to the February 3 order.
Crude oil pumped from the ground and the seabed is refined and converted into fuels like gasoline, diesel and jet fuel (ATF).
The government also increased the export tax on diesel to ₹7.5 per liter from ₹5, and the same on overseas shipments of ATF to ₹6 per liter from ₹3, ₹5 per litre.
The new tax rates came into effect on February 4.
The tax on domestic crude oil and fuel exports is now down from the lows it hit last month.
Tax rates were cut in the last bi-monthly review on January 17, following the drop in world oil prices. International oil prices have since firmed, necessitating the increase of an exceptional tax.
India imposed windfall taxes for the first time on July 1, joining a growing number of countries that tax the super normal profits of energy companies. At that time, export duties of ₹6 per liter ($12 per barrel) each were levied on petrol and ATF and ₹13 per liter ($26 per barrel) on diesel.
A windfall tax of ₹23,250 per ton ($40 per barrel) on domestic crude production was also levied.
The export tax on gasoline was removed in the very first review.
Tax rates are revised fortnightly based on average oil prices for the previous two weeks.
Reliance Industries Ltd, which operates the world’s largest single-site oil refinery complex at Jamnagar in Gujarat, and Nayara Energy, backed by Rosneft, are the major fuel exporters in the country.
The government levies a windfall tax on oil producers on any price they get above a threshold of $75 a barrel.
The levy on fuel exports is based on the cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the realized international price of oil and the cost.