India reduces windfall tax on petroleum crude, ATF and diesel

In a significant move aimed at providing relief to consumers and industries grappling with soaring fuel prices, the Indian government has announced a substantial reduction in the windfall tax on petroleum crude, aviation turbine fuel (ATF), and diesel. The changes, which are set to take effect on October 18, come after previous increases in these taxes, according to sources.According to a Reuters report, the windfall tax on petroleum crude will be lowered from 12,100 rupees ($145) per ton to 9,050 rupees ($108) per ton. Simultaneously, the government will decrease the windfall tax on ATF from 2.50 rupees ($0.03) per litre to 1 rupee ($0.01) per litre and reduce the tax on diesel from 5 rupees ($0.06) per litre to 4 rupees ($0.04) per litre. These adjustments aim to address the economic burden on consumers facing rising fuel costs and provide some reprieve. 
The government originally introduced windfall taxes on the sale of locally produced crude oil on July 1, 2022, in response to the significant profits garnered by oil exploration and production companies amid multi-year high crude oil prices, particularly following Russia's invasion of Ukraine, a report from Mint stated. The report also mentioned that while these changes are expected to provide relief to consumers and alleviate financial pressures, it is important to note that international oil prices remain dynamic. On October 17, global oil prices saw an increase. Brent futures rose by $0.74 to reach $90.39 a barrel, while US West Texas Intermediate (WTI) crude increased by $0.69 to $87.35. The oil market's fluctuations are influenced by various global factors, including political developments. 
In the domestic market, crude oil futures with an expiry date of October 19 were trading lower by 0.7 per cent at 7,188 rupees ($86.3) per barrel on the Multi Commodity Exchange (MCX). During the trading session, the price fluctuated between 7,132 ($85.6) and 7,528 ($90.4) rupees per barrel, compared to the previous close at 7,239 rupees per barrel.

(Ira Singh, Asstt Editor)