Export tax on diesel, ATF hiked; windfall profit levy on domestic oil production up

/PTI

New Delhi, September 1

The government on Thursday raised the tax on the export of diesel and jet fuel (ATF) and hiked the windfall profit levy on domestically-produced crude oil in line with rising product margins and oil prices.

At the fourth fortnightly review, the government raised the windfall profit tax on the export of diesel to Rs 13.5 per litre from Rs 7 per litre. The tax on Aviation Turbine Fuel (ATF) exports too has been hiked to Rs 9 from Rs 2 per litre with effect from September 1, according to a Finance Ministry notification issued late Wednesday night. Alongside, the tax on domestically-produced crude oil too has been hiked to Rs 13,300 per tonne from Rs 13,000. The new levies come into effect from Thursday, September 1.

Fourth fortnightly review

• At the fourth fortnightly review, the government raised the windfall profit tax on the export of diesel to Rs 13.5 per litre from Rs 7 per litre
• The tax on jet fuel exports too has been hiked to Rs 9 from Rs 2 per litre with effect from September 1
• The tax on domestically-produced crude oil too has been hiked to Rs 13,300 per tonne from Rs 13,000

Commercial LPG cheaper by Rs 91.5/cylinder

• The price of commercial LPG used in hotels and restaurants on Thursday was slashed by Rs 91.5 per cylinder on softening international prices. The price of a 19-kg commercial LPG cylinder was cut to Rs 1,885 per cylinder in the national capital from Rs 1,976.50

The recovery in oil prices in the second half of August as compared to the first fortnight of the month led to a slight upward revision in windfall taxes on domestic oil production. These are now $22.8 per barrel, up from $22 previously.

“The adjustments, while still ad hoc, highlight the producer oil price cap of $70-75 per barrel and profitability of $20-21 a barrel,” Morgan Stanley said in a note.

The export tax on diesel and jet fuel was raised by $17 per barrel and $14 to $27 a barrel and $18, respectively, as refinery margins for these products have risen.

While private refiners Reliance Industries and Rosneft-based Nayara Energy are the principal exporters of fuel like diesel and ATF, the windfall levy on domestic crude targets producers like state-owned Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.

India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners.

Export duties of Rs 6 per litre ($12 per barrel) were levied on petrol and aviation turbine fuel and Rs 13 a litre ($26 a barrel) on diesel. A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.