Although crude oil prices have increased by about 2 percent in the international market, prices are still below $100 per barrel. This is the reason why the government has reduced the windfall tax levied on diesel and ATF exports. Which is a big relief for petroleum companies. However, there has been no change in the tax levied on petrol exports. In such a situation, when petroleum companies are facing loss per liter on selling petrol, diesel and ATF locally, export is the only way to earn. Government imposes windfall tax on companies to increase domestic supply. Let us also tell you what kind of decision has been taken by the government.

How Much Windfall Tax Reduction?

The government on Wednesday reduced the windfall tax on diesel and ATF exports, while keeping it at the same level for petrol for the fortnight starting October 1. The rate of Special Additional Excise Duty (SAED) along with road and infrastructure cess on diesel exports will now be reduced from Rs 20 per liter to Rs 16 per litre. SAED on export of ATF has been fixed at Rs 10.5 per litre, which was earlier Rs 15 per litre. Duty on export of petrol has been kept unchanged at Rs 0.5 per liter for the next fortnight. The finance ministry has said in a notification that the fee hike will be effective from October 1.

Why is windfall tax imposed?

Amid rising tensions in West Asia, the government on March 27 imposed export duties on diesel and ATF and revised rates every fortnight. Levy was imposed on export of petrol from May 16. The ministry also said that there has been no change in the existing duty rates on petrol and diesel approved for domestic consumption. In the midst of the war in West Asia, unprecedented taxes were imposed to increase domestic availability of fuel. It was also intended to prevent exporters from taking undue advantage of price differentials as global crude oil prices rose since the start of the war. The purpose of the windfall tax was to ensure domestic availability of petroleum products by discouraging exports amid the Middle East crisis.