The government has drastically reduced the fuel tax… Not for you, but for Ambani!
The Indian government has reduced the windfall tax on diesel and aviation turbine fuel exports by Rs 2 per litre and has announced the complete abolition of the Rs 6 per litre tax on petrol exports. Shares of Reliance Industries Ltd rose on the announcement.
On July 1, the Union government imposed a special tax called windfall tax on exports of petrol, diesel and jet fuel by oil companies in India. It was reported that the government will get tax revenue of Rs 94,800 crore from this tax.
The government imposes a windfall tax on the firms under a particular department at a certain point of time when they yield huge profits. Oil companies have been making huge profits when crude oil prices have peaked internationally. Therefore, in early July, the government imposed a windfall tax on crude oil production and oil exports in India.
As per the windfall tax, domestically exported petrol and aviation turbine fuel will be taxed at Rs 6 and diesel at Rs 13. Also, a tax of Rs.23,250 per tonne for domestically produced crude oil is levied.
In May, it was estimated that the government would lose Rs 1 lakh crore in tax revenue if the tax is cut by Rs 8 on petrol and Rs 6 on diesel. In this case, it was said that through the windfall tax, the loss to the government will be fixed and at the same time, the profit of Indian oil producers and exporters will decrease. However, the Union government had said that the tax rate will continue till the price of crude oil comes down.
After a few weeks since then, the Indian government reduced the windfall tax levied as international oil prices continued to fall. Through this, the tax on diesel and aviation turbine fuel exports has been reduced to Rs 2 and for petrol exports, Rs 6 is eliminated completely, domestically produced crude oil has been reduced by 27% from Rs 23,250 to Rs 17,000 per tonne.
Shares of Reliance Industries Ltd are rising due to the windfall tax cuts announced by the Indian government. Shares of Reliance Industries Ltd rose more than 2% to Rs 2,501 in early morning trading on Wednesday.
According to FGE, “Reliance and Rosneft-backed Nayara., India’s only privately owned refiners, make up 80% to 85% of India’s overall gasoline and diesel exports.”