The Indian Oil Ministry has asked the country’s Finance Ministry to consider scrapping the windfall tax on petroleum products due to falling crude oil prices, India’s broadcaster ET Now reported exclusively on Monday, quoting sources.
The oil ministry has requested immediate withdrawal of the windfall tax on petroleum products in India, due to the recent slide in crude oil prices and the oil ministry’s expectation that oil prices are set to go further down, ET Now reported.
The oil ministry has sent a number of presentations to the finance ministry, in which it says that oil companies are not making any windfall – or excessive – profits at crude oil prices below $80 per barrel.
A potential withdrawal of the windfall tax would help Indian producers such as Oil and Natural Gas Corporation (ONGC) and Oil India, ET Now’s sources said.
India first introduced the windfall tax in July 2022, joining other governments in taxing the excessive profits of energy companies. India slapped the windfall tax on the country’s oil producers and oil refiners who were exporting more due to the high international price of crude oil and refined products. The new taxes were aimed to serve as an incentive to keep more products at home and export less.
“As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market,” a government-issued statement said at the time.
Since then, India has been reviewing the tax rates on crude oil and fuels every two weeks, based on the average oil prices in the past two weeks.
Apart from petroleum crude produced domestically, the government is taxing with a windfall tax gasoline, diesel, and aviation turbine fuel (ATF), too.
In the latest windfall tax revision, India slashed, effective August 1, the windfall tax on domestically produced crude due to lower international prices, and kept the windfall tax on petroleum products at zero.
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