In a bid to strike a balance between domestic and international fuel markets, the Central Government of India has introduced significant changes to its taxation structure for crude oil and petroleum product exports, effective immediately.
The Ministry of Finance, Department of Revenue, issued two notifications as per the Gazette of India, amending the existing taxation rates. These changes are set to have far-reaching implications:
The windfall tax on domestic crude oil production has been substantially increased, soaring from Rs 6,700 per ton to Rs 10,000 per ton. This move is aimed at capturing a more substantial share of the profits resulting from the rising crude oil prices, thereby providing a boost to government revenues.
In a bid to enhance competitiveness in the international market, the windfall tax on the export of aviation turbine fuel (ATF) has been reduced from Rs 4 per liter to Rs 3.50 per liter. This alteration is expected to make Indian ATF exports more attractive to international buyers.
Furthermore, the tax on the export of diesel has been adjusted from Rs 6 per liter to Rs 5.50 per liter. This change is geared towards promoting diesel exports, potentially increasing revenue from international sales.
These alterations come at a critical juncture as India grapples with the complexities of fluctuating global oil prices. The government’s objective is to capitalize on high crude oil prices while ensuring competitiveness in the international fuel market.
The Ministry of Finance’s notifications, No. 30/2023-Central Excise and No. 31/2023-Central Excise, are scheduled to take effect on September 16, 2023. The government anticipates that these tax adjustments will positively impact the nation’s fiscal health and enhance its position in the global fuel market.
These changes follow a series of recent adjustments to the taxation structure for petroleum products and are part of the government’s broader strategy to adapt to the evolving economic landscape and maintain stability within the energy sector.
