New Delhi: The central government has announced a hike in the windfall tax on petroleum crude - from Rs 6,800 to Rs 9,600 per metric ton. Effective April 16, the Special Additional Excise Duty (SAED) on crude oil tax has surged by 41 percent. However, diesel and aviation turbine fuel will remain unaffected and continue to have a zero windfall tax rate.

This was announced as a measure to regulate the export practices of private refiners. 

Initially introduced in July 2022 to target crude oil producers, the windfall tax has since been expanded to include gasoline, diesel, and aviation turbine fuel (ATF) exports. The primary objective remains consistent: to discourage the prioritization of exports over domestic market supply, especially amidst soaring global prices.

This latest adjustment follows previous increments, including the recent hike on April 4, where the windfall tax on petroleum crude rose from Rs 4,900 to Rs 6,800 per metric ton. Additionally, on March 15, the finance ministry raised the windfall tax on domestically produced crude oil to Rs 4,900 per tonne.

The decision to intensify taxation on petroleum crude comes amidst fluctuating global crude oil prices. While the India crude basket averaged $84.49 per barrel in March, recent figures show it averaging $91.20 per barrel as of April 12. Under the windfall tax policy, domestic crude oil faces levies if global benchmark rates exceed $75 per barrel, while diesel, ATF, and petrol exports attract taxes when product margins surpass $20 per barrel.

The windfall tax rate is fortnightly revised to maintain stability in the energy sector. Notably, diesel and aviation turbine fuel will remain exempt from the increased tax rate, aligning with the government's strategic focus on essential fuel sectors.

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