Government Hikes Windfall Tax on Crude Oil by 85%

The government has increased the windfall tax on domestically produced crude oil to Rs 6,000 per tonne, up from Rs 3,250 per tonne, effective Tuesday. This tax, a form of Special Additional Excise Duty (SAED), remains nil on diesel, petrol, and jet fuel exports. The new rates are effective July 2.

The government has enacted a substantial hike in the windfall tax on domestically produced crude oil, raising it to Rs 6,000 per tonne from the previous Rs 3,250 per tonne. This adjustment, effective from Tuesday, is part of the Special Additional Excise Duty (SAED) framework.

While the tax on crude oil has seen an increase, the SAED on the export of diesel, petrol, and jet fuel remains set at 'nil,' according to an official notification. The revised rates will come into force on July 2.

India initially introduced windfall profit taxes on July 1, 2022, aligning with other countries that tax the supernormal profits of energy companies. The tax rates are reviewed bi-weekly, based on the preceding two weeks' average oil prices.

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