After being in existence for almost over two years, the government has decided to scrap the windfall tax on aviation turbine fuel (ATF), crude products, diesel and petrol products, confirming a CNBC-TV18 newsbreak.
Sources earlier told CNBC-TV18 that the top government, including the Prime Minister’s office, took a detailed review of the levy with the Revenue Department and the Petroleum Ministry, post which it decided to “discontinue with the tax”.
According to sources, some of the reasons behind the decision of discontinuation of the tax include the fact that of late the levy was not yielding much revenue. “The industry, since its existence, was unhappy with the tax. The levy was not making the industry enhance production levels, thus the PMO decided to discontinue the tax.”
“Of late, average crude prices had become comfortable because of which most of the segments of the tax, be it the levy on ATF, petrol, or diesel, were continuing as a nil tax, thus the government did not want to continue with a tax which was not garnering much revenue,” they added.
The windfall tax, which is revised every 15 days based on international crude oil prices, was first introduced on July 1, 2022, to help the government tide over the aftereffects of Covid-19 and garner more revenue from the industry.
The tax rates were reviewed every fortnight, based on the average oil price in the last two weeks.
The tax formula is managed by the Department of Revenue and adjusts according to fluctuations in global oil prices.
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