The Indian government has reduced the windfall tax on domestically produced crude oil to ₹1,850 per tonne, effective August 31, 2024. This marks a decrease from the previous rate of ₹2,100 per tonne, which was adjusted earlier this month. The windfall tax, imposed as a Special Additional Excise Duty (SAED), is subject to revision every fortnight based on fluctuations in international oil prices.
The introduction of the windfall tax in July 2022 aimed to capture excess profits from oil producers benefiting from high global prices, particularly during geopolitical tensions that affected supply chains. The government has been actively managing this tax to ensure that domestic fuel prices remain stable and that private refiners prioritize local markets over international sales, which can yield higher profits.
Despite the reduction in the windfall tax on crude oil, the government has retained the tax on the export of diesel and aviation turbine fuel (ATF) at zero. This strategic decision reflects ongoing efforts to regulate the domestic fuel supply and mitigate inflationary pressures on consumers.
The windfall tax has been a critical tool for the government in addressing the economic challenges posed by rising energy prices, allowing it to generate revenue while also encouraging oil companies to reinvest in domestic operations and infrastructure.
