Centre may abolish windfall tax if crude oil prices drop

Centre may abolish windfall tax if crude oil prices drop

Finance Ministry source told Business Today Television that the centre may be abolishing the tax on windfall gains if crude oil prices continue to drop.

The third review meet is likely to take place around August 16th. The source said that removing windfall tax would only benefit the current account.

The price of crude dropped below $95 a barrel in trade today, a drop in crude prices globally in the last two weeks.

A windfall tax is a one-off tax imposed by the central government on a firm. Windfall profits are a financial profit that is created when the company gains from something that they are not responsible for.

The centre had performed a second review of crude oil prices last week and decided to raise the tax on domestically produced crude oil to Rs 17,750 per tonne from Rs 17,000 per tonne, while export taxes on jet fuel were cut to zero from Rs 4 per liter.

Excise duty on diesel exports was reduced to Rs 5 per litre from Rs 11 per litre earlier in the day. The excise duty on the export of petrol is nil.

Windfall gains will not be looked at by the government. The data on crude prices received from Ministry of Petroleum shows that we have reduced it in the last two meetings.

On July 20, the government had lowered the tax on domestic crude and exports of diesel and aviation turbine fuel after it removed the tax on overseas shipment of petrol in the first review since the windfall taxes were imposed.