Petrol Diesel Tax Cut: The central government has provided significant relief to oil companies. The government has reduced the Windfall Gain Tax on the export of diesel and aviation turbine fuel (ATF). The new rates came into effect today, October 1. However, this decision will not affect the price of diesel in the domestic market, as the tax has been reduced on exported diesel and ATF.
According to a notification issued by the Finance Ministry, for the new fortnight beginning today, the Special Additional Excise Duty (SAED) and Road and Infrastructure Cess on diesel exports have been reduced from ₹20 per liter to Rs 16 per liter. The SAED rate on the export of aviation turbine fuel (ATF) has been reduced from Rs 15 per liter to ₹10.5 per liter. There is no change in the windfall tax on petrol.
Why is windfall tax imposed?
Amid rising crude oil prices, the government first imposed a windfall tax on petrol, diesel, and ATF on March 27th to prevent private and public refineries from making unexpected profits by selling oil abroad instead of in the domestic market. The aim was to ensure adequate fuel supplies within the country. The government reviews this tax every 15 days. The tax rate is increased or decreased based on changes in global margins.
Will the price of oil decrease in the domestic market?
This reduction applies only to the tax on diesel and ATF exported by refineries. There have been no changes to the excise duty and local taxes on petrol and diesel sold in the domestic market. This means that consumers will not see any relief in petrol and diesel prices right now. Due to the US-Iran war, crude oil prices have risen significantly in the international market. Until crude oil returns to pre-war levels, there is little chance of petrol and diesel prices decreasing.