On July 1, 2022, the Government introduced windfall profit taxes, aligning itself with an increasing global trend where nations impose levies on the extraordinary profits earned by energy companies.
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Government Reversal: Windfall Tax on Petroleum Crude Slashed
As per an official notification issued on Monday, the government has reduced the windfall tax on petroleum crude from Rs 2,300 per tonne to Rs 1,700 per tonne. This reduction, effective from January 16 (Tuesday), reverses the earlier increase on January 2 when the government raised the windfall tax on petroleum crude oil from Rs 1,300 per tonne to Rs 2,300 per tonne.
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India’s Move to Curb Windfall Profits in the Oil Sector
In July 2022, India enforced a windfall tax on crude oil producers and extended the imposition of this tax on the export of gasoline, diesel, and aviation fuel. Private refiners had expressed a desire to capitalize on strong refining margins in international markets rather than selling these products domestically. The government initially introduced windfall profit taxes on July 1, 2022, in response to substantial profits accrued by oil production companies, attributed to the prolonged period of elevated crude oil prices following Russia’s invasion of Ukraine.
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