New Delhi, Jan 3: The government has raised the windfall tax on crude oil and reduced the tax on diesel and aviation turbine fuel.
The government has hiked the windfall tax on petroleum crude oil to Rs 2,300 ($27.63) a tonne from Rs 1,300 earlier, according to the official notification.
Upstream oil companies ONGC and Oil India Ltd (OIL) stand to lose as they will not get the full benefit of rising international prices for their crude.
However, the government on the other hand will get more resources to help to keep its fiscal deficit in check.
A tax of Rs 0.5 per litre on diesel and aviation fuel has been scrapped in the review.
The government had first imposed the windfall tax on crude oil in July last year and extended the levy on exports of gasoline, diesel and aviation fuel after private refiners started making gains from robust refining margins in overseas markets, instead of selling in the domestic market.
Meanwhile, Goldman Sachs has lowered its projection for India’s current account deficit in 2023-2024 to 1 per cent of GDP from 1.3 per cent earlier as the US bank expects services exports to rise further while crude oil prices are expected to fall going ahead.
The Wall Street bank expects oil prices to rule at $81 a barrel in 2024 instead of the above $90 forecast earlier and services exports to remain strong due to US growth remaining resilient.
“India’s external balances remain favourable with a combination of low current account deficit, strong capital flows, adequate foreign exchange reserves and low external debt. Combined with this, expectations for a weaker dollar due to the likely five US Fed rate cuts this year suggest a ‘goldilocks’ environment for the country’s external balances,” according to the report.
Goldman Sachs has also reduced its projection for India’s CAD for 2024-25 to 1.3 per cent from 1.9 per cent earlier.
The global investment bank expects robust capital flows in 2024, driven by strong equity portfolio flows as the US Fed starts easing interest rates. FDI flows are also expected to increase as the country is emerging as an investment destination as global majors seek to diversify their supply chain outside China.
Goldman Sachs has projected an overall balance of payment surplus of $39 billion in FY24 but this is expected to decline to $27 billion in 2024-25.