India considers scrapping windfall tax on crude oil

India’s Finance Ministry is currently assessing the effectiveness of the windfall tax on domestic crude oil production, which was imposed in July 2022 to capitalise on rising global crude prices.

The tax, a special levy on crude oil production, was introduced to capture additional revenue from producers during periods of high oil prices. Additionally, the government imposed special taxes on diesel, petrol, and aviation turbine fuel exports.

However, as global crude oil prices declined, the windfall tax on domestic crude oil was gradually reduced and eventually eliminated on September 18, 2023. The tax on fuel exports was also removed.

The Finance Ministry is now evaluating the revenue generated from the windfall tax and analysing the current trend in global crude oil prices to determine whether to permanently scrap the levy.

Attribution: Reuters

Subediting: M. S. Salama