In News
- The Centre slapped a windfall tax on domestic crude oil producers, imposed export duties on petrol, diesel and aviation turbine fuel (ATF), and hiked the import duty on gold in efforts to reduce pressure on the rupee, rein in the current account deficit (CAD), and increase the domestic supply of petroleum products.
Windfall Tax
- A windfall tax is a higher tax rate on sudden big profits levied on a particular company or industry.
- Domestic producers sell crude oil to domestic refineries at international parity prices, thus making windfall gains.
- ONGC reported bumper profits in the March quarter (when international prices soared to a near 14-year high of $139 per barrel).
- Small producers, whose annual production of crude in the preceding financial year was less than 2 million barrels, will be exempt from this cess.
Impact
- The government’s decision to have an additional cess of Rs 23,250 per tonne by way of an special additional excise duty on crude is going to have a major impact on companies like state-run Oil and Natural Gas Corporation (ONGC), Oil India, Vedanta’s Cairn Oil and Gas, and Reliance Industries (RIL).
- The decision may fetch the government around Rs 67,400 crore per annum, as the country produces around 29 million tonnes of crude oil a year.
Source- Business Standard
