E-Paper
Windfall gain tax imposed on petroleum sector, customs duty increased on gold
Customs duty has been increased to 15% from 10.75% on gold to curb rising import of the precious metal to check volatility of the Indian currency against the dollar
The government on Friday imposed a windfall gain tax on the petroleum sector, where firms were making abnormal profits due to geopolitical reasons, and increased customs duty steeply to 15% from 10.75% on gold to curb rising import of the precious metal to check volatility of the Indian currency against the dollar.
A finance ministry official said a cess of ₹23,250 per tonne has been imposed on domestically-produced crude, and that it will impact large producers such as state-run Oil and Natural Gas Corporation and private players Reliance Industries Limited and Cairn India Limited. Small producers having less than two million barrels of annual crude output have been exempted from the levy.
Similarly, taxes have been imposed on exports of petrol and diesel at the rate of ₹6 and ₹13 a litre. A special additional excise duty (SAED) of ₹6 per litre has also been imposed on exports of aviation turbine fuel (ATF), the official said.
“The taxes in the form of cess and SAED will have no impact on domestically consumed petrol, diesel and ATF prices,” the official said.
HT on May 27 reported that India was considering the so-called windfall tax on oil and gas producers (state-owned as well as private) to offset ballooning public expenditure on fuel, food and fertiliser subsidies amid skyrocketing inflation.
A second official said the customs duty on gold was raised to check the rising import, which was one of the reasons for the outflow of foreign currencies and putting pressure on the rupee against the dollar.
“There has been a sudden surge in imports of gold. In May, 107 tonnes of gold were imported and in June also the imports have been significant. The surge in gold imports is putting pressure on the current account deficit. To curb import of gold, customs duty has been increased,” the first official said.
Officials said the cess of ₹23,250 per tonne through SAED has been imposed on domestically produced oil as crude prices have risen sharply in recent months. “The domestic crude producers sell crude to domestic refineries at international parity prices. As a result, domestic crude producers are making windfall gains. Taking this into account, a cess of ₹23250 per tonne has been imposed on crude. Import of crude would not be subject to this cess,” said the first official.
He said this cess will have no adverse impact on domestic petroleum products/fuel prices. “Also, to incentivise an additional production over the preceding year, no cess will be imposed on such quantity of crude that is produced in excess of last year’s production by a crude producer,” the official said.
The government imposed special additional excise duties and cesses on exports of petrol and diesel as refiners, particularly those in the private sector, were exporting these products in the international market for windfall gains rather than supplying domestically, he said. “As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market.” Cesses would apply to any export of diesel and petrol from the country, he added. As all these measures have been applied to exports and have no implication on domestic retail prices of petrol and diesel, he said.
“At the same time, export policy condition has been imposed by the government...the exporters would be required to declare at the time of exports that 50% of the quantity mentioned in the shipping bill has been/will be supplied in the domestic market during the current financial year,” he said.
These measures would not have any adverse impact on domestic retail prices of diesel and petrol. Thus, the prices would remain unchanged. At the same time these measures will ensure domestic availability of the petroleum products.
