India has reduced its windfall tax on domestically produced crude oil to ₹8,400 per tonne, effective from May 1st, 2024. This move comes after the government previously raised the tax to ₹9,600 per tonne in mid-April.
Windfall taxes are levied on companies that profit unexpectedly from a sudden surge in commodity prices. In India’s case, the tax targets oil and gas producers who are benefiting from high global crude oil prices.
The government revises the windfall tax rate every fortnight based on the average international oil prices in the preceding two weeks. This latest reduction suggests a potential moderation in global oil prices or a desire by the government to ease the burden on domestic oil producers.
The impact of this tax cut remains to be seen. It could potentially lead to lower fuel prices for consumers, but this would depend on various factors, including global oil prices and the pricing strategy of oil marketing companies in India.
