New Delhi, September 1
The government on Thursday raised the export tax on diesel and jet fuel (ATF) and raised the windfall tax on locally produced crude oil based on rising product margins and oil prices.
In the fourth bi-monthly review, the government raised the windfall tax on diesel export to 13.5 rupees per liter from 7 rupees per litre. The Aviation Turbine Fuel (ATF) Export Tax has also been increased to Rs 9 from Rs 2 per liter with effect from September 1, according to a Ministry of Finance notification issued late Wednesday evening. At the same time, the tax on crude oil produced in the country was also increased to Rs 13,300 per ton against Rs 13,000. The new levies come into force from Thursday, September 1st.
Fourth bimonthly magazine
- In the fourth fortnightly review, the government raised the windfall tax on diesel export to Rs 13.5 per liter from Rs 7 per liter
- Jet fuel export tax has also been increased to Rs 9 from Rs 2 per liter with effect from 1 September
- The tax on crude oil produced in the country has also been raised to Rs 13,300 per ton from Rs 13,000
Cheaper commercial LPG of Rs 91.5/cylinder
- The price of commercial LPG used in hotels and restaurants on Thursday was reduced by 91.5 rupees per bottle due to falling international prices. The price of a 19kg commercial LPG cylinder has been reduced to Rs 1,885 per cylinder in the nation’s capital from Rs 1,976.50
The recovery in oil prices in the second half of August compared to the first half of the month led to a slight upward revision of exceptional taxes on domestic oil production. These are now $22.8 a barrel, down from $22 previously.
“The adjustments, while still ad hoc, highlight the producer oil price ceiling of $70-75 per barrel and profitability of $20-21 per barrel,” Morgan Stanley said in a note.
The export tax on diesel and jet fuel was increased from $17 per barrel and $14 to $27 per barrel and $18, respectively, as refining margins for these products increased.
While private refiners Reliance Industries and Rosneft-based Nayara Energy are major exporters of fuels like diesel and ATF, the one-off domestic crude tax targets producers like the state-owned Oil and Natural Gas Corporation. (CGSB) and Vedanta Ltd.
India imposed windfall taxes for the first time on July 1, joining a growing number of countries that tax the super normal profits of energy companies. But international oil prices have cooled since then, eroding profit margins for oil producers and refiners.
Export duties of 6 rupees per liter ($12 per barrel) were levied on gasoline and jet fuel and 13 rupees per liter ($26 per barrel) on diesel. A windfall tax of Rs 23,250 per tonne ($40 per barrel) on domestic crude production was also levied.