The government has raised the windfall tax on petroleum crude to ₹4,600 per metric ton from ₹3,300, effective March 1, according to a government order released on Thursday, February 29. Additionally, the windfall tax on diesel has been reduced to zero from ₹1.50 per litre, also effective March 1. However, the tax on petrol and aviation turbine fuel will remain at zero.
This marks the third increase in the windfall tax on domestically produced crude oil this month alone. On February 15, the tax was raised to ₹3,300 per tonne from ₹3,200 per tonne, while the tax on diesel was raised to ₹1.50 per litre from zero.
India introduced the windfall tax on crude oil producers in July 2022 and extended the levy to exports of gasoline, diesel, and aviation fuel. This move came as private refiners sought to sell fuel overseas to benefit from robust refining margins instead of selling domestically. The government revises the tax fortnightly based on average oil prices in the preceding two weeks.
Despite expectations of continued volatility in international crude oil prices, influenced by the Organization of the Petroleum Exporting Countries (OPEC) anticipating strong demand in 2024 and 2025, prices have not significantly risen following the Red Sea crisis.
On Thursday, Brent crude futures for April were down two cents at $83.66 a barrel, while US West Texas Intermediate crude futures rose 25 cents to $78.79. Brent has remained above the $80 mark for three weeks, with the Middle East conflict having only a modest impact on crude flows. Amid uncertain demand outlook, analysts anticipate OPEC extending the current supply agreement until the end of the second quarter.
