Windfall tax on domestic crude oil cut

The government on Friday cut the windfall profit tax on locally-produced crude oil in line with a fall in international rates, and reduced the levy on export of diesel and jet fuel (ATF) with effect from September 17.At the fifth fortnightly review, the government reduced tax on domestically-produced crude oil to Rs 10,500 per tonne from Rs 13,300 per tonne.The levy on the export of diesel was reduced to Rs 10 per litre from Rs 13.5. Also, the tax on Aviation Turbine Fuel (ATF) exports was cut to Rs 5 a litre from Rs 9 with effect from September 17, according to a finance ministry notification issued late Friday night.International oil prices have fallen to six-month lows this month, leading to a reduction in the windfall profit tax.The basket of crude oil that India buys has averaged USD 92.67 per barrel in September as against USD 97.40 in the previous month.While private refiners Reliance Industries Ltd and Rosneft-based Nayara Energy are the principal exporters of fuels like diesel and ATF, the windfall levy on domestic crude targets producers like state-owned Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners.Export duties of Rs 6 per litre (USD 12 per barrel) were levied on petrol and aviation turbine fuel and Rs 13 a litre (USD 26 a barrel) on diesel.A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.The duties were partially adjusted in the previous four rounds on July 20, August 2, August 19 and September 1, and were removed for petrol.