InvestorQ : How do you see the impact of the government cutting windfall tax on oil?
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How do you see the impact of the government cutting windfall tax on oil?

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Riya Dwivedi answered.
1 month ago
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When the government introduced the windfall tax, the idea was compensate for the high prices of crude and reduce oil going out of India. Today, with oil prices down to around $87/bbl, the government has been aggressively cutting down on the windfall tax. Now, in line with the falling global crude prices, the Indian government has decided to cut its windfall tax rates on domestically produced and extracted crude oil. The windfall tax has been cut from Rs10,500/tonne to Rs8,000/tonne. It may be recollected that when windfall tax was imposed in July, it was Rs23,250 per tonne on oil, so it is down to a third.

Apart from cutting the windfall tax on oil produced in India, the government has also scrapped export tax on aviation turbine fuel (ATF) totally and halved export duties on diesel from Rs10/litre to Rs5/litre. This is likely to benefit most of the upstream oil players in the oil industry like ONGC, Oil India Ltd and to a lesser extent Reliance Industries and Vedanta too. The government has confirmed that this time around, to reduce frictions in its actions, the windfall tax was being implemented in consultation with industry.

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