The move, which is effective from July 20, will give relief to top fuel exporters like Reliance Industries, and oil explorers like Oil and Natural Gas Corporation (ONGC).
The Centre has scrapped a Rs 6 per litre tax on the export of petrol completely and reduced the same on aviation turbine fuel (ATF) to Rs 4 a litre from Rs 6 per litre. Besides, the tax on diesel has been reduced to Rs 11 from Rs 13 per litre, according to a government notification. Further, tax on domestically-produced crude has been cut by 27 per cent to Rs 17,000 per tonne.
A windfall tax is a one-off tax levied on companies deemed to have made unreasonably high profits, normally due to unusually favourable market factors.
“In exercise of the powers conferred by section 5A of the Central Excise Act… the Central Government, on being satisfied that it is necessary for the public interest so to do… notification said added it will come into force from July 20…”
On July 1, the central government imposed windfall gain taxes on the export of petrol, diesel, and aviation turbine fuel (ATF), and on the domestic production of crude oil. It also mandated exporters to meet the requirements of the domestic market first.
Following this, the Indian oil companies were paying Rs 6 per litre (around $2.2 per barrel) on exports of petrol and ATF, and Rs 13 per litre (around $26.3 per barrel) on exports of diesel.
Crude has slumped since mid-June on fears of recession.
On Wednesday, Brent crude prices fell 39 cents or 0.5% to $106.96 a barrel, while US West Texas Intermediate (WTI) crude fell 62 cents to $103.60 per barrel.