Economy News

windfall tax: the windfall tax will continue for the time being; collections at Rs 25,000 cr this year – Mintpaisa

The seven-month windfall levy on domestically produced crude oil and fuel export is expected to yield about Rs 25,000 crore in the current financial year ending March 31 and the levy will continue for now while international oil prices are on the rise again, top government officials said. “As of now, crude prices are on the rise again. So for the time being the windfall tax will continue,” CBIC Chairman Vivek Johri told PTI in Delhi.

Separately, Revenue Secretary Sanjay Malhotra said the budget estimated windfall tax collection at Rs 25,000 crore for the current financial year.

As the geopolitical situation continues to be volatile, Johri said it would be “difficult to predict how long the windfall taxes will continue.”

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 Rs 6 per liter (USD 12 per barrel) were levied on petrol and ATF, and Rs 13 per liter (USD 26 per barrel) on diesel.

A windfall tax of Rs 23,250 per tonne (USD 40 per barrel) on domestic crude production was also levied.

The levy is revised every two weeks and the rates are moderated according to international oil prices.

The exceptional tax on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) is currently Rs 1,900 per ton. Crude oil pumped out of the ground and under the seabed is refined and converted into fuels such as gasoline, diesel, and aviation turbine fuel (ATF).

The tax on diesel export is Rs 5 per liter and that on overseas shipments of ATF is Rs 3.5 per litre.

The export tax on gasoline was removed in the very first review.

The government levies a windfall tax on oil producers on any price they obtain above a threshold of US$75 per 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.

Johri said two rounds of petrol and diesel excise duty cuts to cool retail prices have resulted in a substantial decline in excise collection in the current 2022-23 financial year. “Because of duty reductions, the RE is lower than the BE.”

For the current financial year, the revised estimates peg the excise sponge at less than Rs 3.20 lakh crore against Rs 3.35 lakh crore targeted in last year’s budget.

For 2023-24, the collection has been set at Rs 3.39 lakh crore.


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