August8 , 2022

Centre pares windfall tax on crude producers, scraps petrol exports levy

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The decision comes amid a decline in international rates.

The decision comes amid a decline in international rates.

With global oil prices ebbing, the Centre on July 20, 2022 has slashed the windfall tax levied on crude petroleum producers, reduced the export tax on Aviation Turbine Fuel (ATF) and diesel and scrapped such duties on petrol exports, effective Wednesday, .   

The government had levied fresh taxes on the export of petrol, fuel and ATF as well as the domestic sale of crude oil, on July 1, in view of runaway global prices, with a plan to review the taxation levels every fortnight.     

In the first such review since then, notified on Wednesday, the cess of ₹23,250 per tonne of petroleum crude has been lowered to ₹17,000 per tonne. This cess was aimed at reining in windfall profits for domestic oil producers who sell their output at international parity prices even to domestic refineries. 

No impact on domestic fuel prices

The Finance Ministry had emphasised that this cess will not apply on imported crude or impact domestic fuel prices. 

Similarly, the levy on export of ATF has been slashed by two rupees per litre to ₹4 per litre, while the export cess of ₹6 per litre of petrol and ₹13 per litre on diesel have been reduced by ₹5 a litre and ₹2 a litre, respectively.   

However, exports of these fuels from units located in Special Economic Zones or SEZs have now been exempted from duties. This is a move away from the July 1 decision that had made cesses apply applicable to any export of diesel and petrol from the country. 

The levies on exports of fuel products were imposed with an eye on ensuring domestic availability of fuels is not adversely affected as producers could tap more lucrative global prices. 

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