In response to the spike in global oil prices, the government on Tuesday reduced the windfall tax on locally produced crude oil while raising the rate on the export of diesel and jet fuel or ATF.
According to a government statement, the tax on crude oil produced by companies like the state-owned Oil and. Natural Gas Corp. was reduced to Rs 9,500 per tonne on Nov. 2 from Rs 11,000 per tonne.
The government increased the rate of diesel export from Rs 12 per liter to Rs 13 per liter as part of the fortnightly modification of the windfall tax.
The tax on jet fuel was also raised from Rs 3.50 to Rs 5 per liter. According to the announcement, a road infrastructure cess of Rs 1.50 per liter is included in the diesel tax.
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When the tax was first imposed, a windfall tax was also imposed on the export of gasoline, diesel, and ATF. Nevertheless, the gasoline charge was eliminated in later fortnightly reviews.
While the tax on windfall profits is determined by deducting any price that producers receive above a certain level, the charge on fuel exports is determined by the cracks or margins that refiners make on international shipments. These margins essentially reflect the difference between the realized international oil price and the price.
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