The government on Monday withdrew the nearly two-and-a-half-year-old windfall tax on domestically produced crude oil and exports of petrol, diesel and aviation turbine fuel, relenting to the industry’s demand after the value of petroleum product exports fell sharply because international oil prices plunged.
The department of revenue on Monday “rescinds” the notifications it had issued on June 30, 2022 levying the windfall tax and the decision came into force with “immediate effect” in the “public interest”, an official said, quoting the order.
“Industry wanted the government to remove the tax as there was no justification for such levies after international oil prices remained subdued for months,” he said, requesting anonymity.
The government had imposed the windfall tax on the petroleum sector from July 1, 2022 after it saw private refiners substantially curtailing domestic supply of transportation fuels and resorting to exports to make huge profits due to a spike in overseas demand. Days before the decision, the benchmark Brent crude price was hovering around $110-120 a barrel. Brent crude has been consistently below $80 a barrel since August 2024 and is currently hovering around $72 per barrel.
According to latest merchandise trade data, subdued international oil prices have depressed India’s per unit realisation of petroleum product exports that plunged over two-and-a-half times to $312.50 per tonne in the first half of 2024-25 from around $792 a tonne in H1 of 2023-24 despite a robust jump in volume-wise shipments.
{{/usCountry}}According to latest merchandise trade data, subdued international oil prices have depressed India’s per unit realisation of petroleum product exports that plunged over two-and-a-half times to $312.50 per tonne in the first half of 2024-25 from around $792 a tonne in H1 of 2023-24 despite a robust jump in volume-wise shipments.
{{/usCountry}}Poor realisation through exports of refined petroleum products has been a major drag for India’s overall export performance. While India’s export of petroleum products fell by over 12.7% to $36.4 billion in April-September 2024 as compared to $41.7 billion in April-September 2023, in terms of volume, exports soared 121% during the period to 116.4 million tonnes as compared to 52.7 million tonnes in H1, FY24, according to commerce ministry data.
The government also scrapped the road and infrastructure cess (RIC) levied on export of petrol and diesel from Monday. Initially, the levy was ₹6 per litre on exports of both petrol and aviation turbine fuel (ATF) and ₹13 a litre on diesel. The levy on domestically produced crude was ₹23,250 per tonne. The rates were reviewed every fortnight based on international benchmarks. While petrol became windfall tax-exempt from the next fortnight, the tax on other items subsequently became zero. No windfall tax was levied on any items since September 2024.