Government removes unexpected tax on petrol and diesel exports, know the details

After several months of deliberations, the government abolished the unexpected tax on aviation turbine fuel (ATF), crude oil products, petrol, and diesel products on Monday. The move has come into effect with immediate effect. This move of the government will provide relief to oil exporting companies like Reliance and ONGC. This decision may increase their gross refining margin.

The windfall tax is an extra charge on domestic crude oil production, which has been imposed since July of 2022 to gain revenue due to the windfall profits of producers after rising global crude oil prices.

After the government's decision, shares of Reliance Industries were trading in the green at Rs 1,300.05 at 1.04 pm on Monday. Besides, the government has also withdrawn the Road and Infrastructure Cess (RIC) on exports of petrol and diesel. A notification in this regard has also been tabled in Parliament.

In September, the Indian government announced the elimination of a windfall tax imposed on crude oil at Rs 1,850 per tonne a month previously, in August. The windfall tax imposed on the export of diesel and ATF has also been eliminated.

Oil companies were reaping unprecedented profits from a spike in crude oil prices as the Russia-Ukraine war began and the West imposed sanctions on the Kremlin. These profits created an environment of very large, one-time profits for the oil companies. In the given view of these super profits, the government had decided to impose a windfall tax on domestic crude oil producers and exporters. The move had aimed at securing extra revenue for the government on the basis of imposing a windfall tax on domestic crude oil producers and exporters.