India Raises Windfall Tax on Petroleum

India increased the windfall tax on petroleum crude to Rs 9,800 per ton, up from the previous Rs 9,050 per ton, effective November 1, as per a government announcement. Simultaneously, the windfall tax on aviation turbine fuel has been reduced to zero from 1 rupee per litre, while diesel's tax has been decreased to Rs 2 per litre from Rs 4 per litre.

This adjustment comes amid crude oil prices hovering around $85 per barrel due to a combination of supply constraints and geopolitical tensions. In the previous bi-weekly review on October 17, the government had lowered the special additional excise duty (SAED) on crude petroleum to Rs 9,050 per ton, effective from October 18.

India initially imposed the windfall tax on crude oil producers in July 2022, subsequently extending it to cover exports of gasoline, diesel, and aviation fuel. This move was prompted by private refiners seeking to capitalize on favorable refining margins in international markets rather than domestically.