The Union government has slashed the windfall tax on domestic crude oil export to Rs 1700 per tonne from the existing Rs 4900 per tonne. As per a finance ministry notification issued on Thursday, December 15, the tax on Aviation Turbine Fuel (ATF) has also been reduced to Rs 1.5 per litre from Rs 5 per litre, while the rate on diesel exports has been cut to Rs 5 per litre from Rs 8 per litre. The new rates will come into effect from Friday. 

Earlier on December 1, the government had announced reduction in windfall tax on sale of locally produced crude oil, which was brought down to Rs 4,900 per tonne. In addition to this, it had also cut export tax on diesel to Rs 6.5 per litre. 

Windfall tax, which is also known as special additional excise duty, was brought in by the government on July 1 this year to tax the industry on extraordinary profits, which it earned through sale of refined crude in global markets. The government reviews this tax every fortnight.

Several nations tax extraordinary profits of energy companies. When the government had introduced windfall tax in July, export duty of Rs 6 per litre each was levied on petrol and ATF. In addition to this, export duty of Rs 13 per litre was also imposed on diesel.

Several major oil companies were hit by this tax and some of them had urged the government to withdraw it and rather adopt the dividend method to seek accruals.

With IANS inputs