India Adjusts Windfall Tax on Oil

he windfall tax on petroleum crude was increased to Rs 12,100 per ton from Rs 10,000, effective from September 30. This adjustment was made when oil prices reached $95 per barrel. Subsequently, oil prices decreased but have started to rise again, partly due to the Israel-Hamas conflict. Additionally, the windfall tax on aviation turbine fuel has been reduced from Rs 3.50 per litre to Re 1, and the tax on diesel has been lowered from Rs 4 per litre to Rs 3. These changes are expected to benefit downstream oil refiners that export petroleum products. The Indian government initially imposed the windfall tax on crude oil producers in July last year and extended the levy to exports of gasoline, diesel, and aviation fuel. This extension was a response to private refiners earning profits from robust refining margins in overseas markets rather than selling their products domestically.