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Windfall tax ends: In a major decision, the Central Government has abolished windfall tax on fuel. This tax was imposed on everything from air turbine fuel to petrol and diesel. It is also formally known as Special Additional Excise Duty (SAED), which was imposed in the year 2022 at a time when crude oil prices reached high levels during the Russia-Ukraine war. Now the Finance Ministry has completely removed this tax.
Tax removed after 30 months
According to a report, amid the fall in international crude oil prices, the government today removed a 30-month-old tax on the export of locally produced crude oil and aviation fuel (ATF), petrol and diesel. Minister of State for Finance Pankaj Chaudhary has presented a notification in this regard in the Rajya Sabha. In which it has been decided to remove the tax imposed on the export of crude oil produced by public sector companies like ONGC and fuel produced by companies like Reliance Industries Limited.
Big relief to oil companies
This decision has been formalized by Notification Nos. 29/2024 and 30/2024, which were introduced in Parliament. Let us tell you that due to the huge increase in crude oil prices, the government has decided to impose windfall tax on the profits of oil companies from the export of domestic crude oil, petrol-diesel and aviation fuel in the year 2022. Aim to increase revenue. Now, with the removal of this tax by the government, all the companies in the oil sector have got a big relief.
What is windfall tax?
In 2022, during the Russia-Ukraine war, India imposed an unprecedented tax on crude oil producers, joining the ranks of countries taxing energy companies’ profits. The prices of crude oil and refinery products like petrol, diesel, ATF in the global market fluctuate with time. Windfall tax is a tax imposed on companies producing crude oil domestically on profits above a certain limit.
Why is there a windfall tax?
If the prices of diesel, petrol and ATF etc. in the global market are higher than the domestic market, then the refineries start increasing exports, so that they can get more profit. The government imposes windfall profits tax to curb this and ensure availability in the domestic market.
First implemented in July 2022
The same calculation applies in the case of crude oil also. At the same time, when its price falls in the global market, companies themselves start reducing exports. When such a situation arises, the government decides to reduce or eliminate the windfall tax. The Government of India decided to impose windfall profits tax for the first time on July 1, 2022.