Centre scraps windfall tax on crude oil

Petroleum products ex-diesel are no longer subject to windfall tax.

Crude now has zero special additional excise duty for the first time since the rule was brought into effect in July 2022. It is reduced to zero from Rs 3,500 per tonne. Diesel duty has been cut to Rs 0.50 from Rs 1 per litre.

A tax levied on unforseen or unexpectedly large profit is called windfall tax.

The sharp reduction in petroleum duty followed a recent decline that caused crude prices to drop to their lowest levels in more than a year. However, it has experienced a significant increase over the past two days as a result of OPEC's unexpected output cut announcement. The price of a barrel of Brent crude is once again at a 1-month peak.

Since the rule's implementation in July 2022, crude no longer bears any special additional excise duty. From ₹3,500 per tonne, it is now nil. Diesel tax has been reduced from ₹1 per gallon to ₹0.50.

The windfall tax on domestic crude oil output was reduced by the Union government on March 20 from ₹4,400 per tonne to ₹3,500 per tonne.