In a recent policy update, the Indian government has announced a decrease in the windfall tax on petroleum crude. The tax will be reduced from Rs 5,700 per metric ton to Rs 5,200 per metric ton, and this change will be effective from June 1. This decision shows the government’s continuous efforts to adjust fiscal measures in response to market dynamics.
The windfall tax, subject to fortnightly revisions, remains unchanged for diesel and aviation turbine fuel. This stability in taxation for these fuels indicates a targeted approach, focusing primarily on crude oil adjustments for now. Previously, on May 16, the government had already reduced the windfall tax on petroleum crude from Rs 8,400 per metric ton to Rs 5,700. This series of reductions underscores the government’s strategy to balance the interests of domestic production with the fiscal framework and global market conditions.
India initiated the windfall tax on crude oil production and exports of gasoline, diesel, and aviation fuel in July 2022. This move aimed to regulate private refiners who preferred exporting fuel to capitalise on robust international refining margins, thereby ensuring adequate local supply.
