Amid reports of a decrease in petrol and diesel prices in India soon, the central government has decided to hike the tax on crude oil while subsequently reducing the tax on diesel and aviation turbine fuel, as announced by a notification.
The windfall tax on petroleum crude oil has been increased ₹2,300 ($27.63) a ton from ₹1,300. The government notification further said that a tax on diesel of ₹0.5 per litre was eliminated. The tax on aviation fuel was also reduced by ₹1.
India imposed a windfall tax on crude oil producers in July 2022 and extended the levy on exports of gasoline, diesel and aviation fuel as private refiners wanted to sell fuel overseas to make gains from robust refining margins instead of selling locally.
Windfall tax on crude oil is imposed by governments of different countries when an industry unexpectedly outperforms and generates substantial profits. When the rates of the global benchmark is increased above $75 per barrel, then the windfall tax is imposed on domestic crude oil.
The change in the windfall tax by Centre comes just day after reports that the government will be slashing the rates of petrol and diesel across the country in 2024, ahead of the upcoming Lok Sabha elections in April-May.
Centre to cut petrol, diesel prices: Report
Centre is currently discussing the possibility of cutting the prices of petrol and diesel ahead of the 2024 Lok Sabha elections, reported News18 in December. The petrol prices be likely cut by ₹10 per litre by the Centre soon.
The Union Finance Ministry has sent a proposal to proposal to the Centre regarding the same, suggesting a price cut of ₹10 in fuel. Two years ago, the Indian government had slashed the petrol and diesel prices by ₹8 and ₹6 respectively.
Earlier, the petrol and diesel prices were cut in India after they touched a record high amid the spike in crude oil rates globally, hiked due to the Covid pandemic and the Russia-Ukraine war.
The petrol prices in Delhi currently stand at ₹96.72 per litre, while the diesel prices are ₹89.62 per litre.