The Bharatiya Government has announced an increase in the windfall tax on domestically produced oil and diesel.
It will be functional from February 16, 2024. The special additional excise duty (SAED) on crude oil rises to 3,300 rupees (approximately $40) per tonne, while diesel exports will now incur 1.50 rupees per litre duty.
The latest adjustments mark a marginal rise from the previous rates, which reflects the government’s strategy to capitalize on energy sector profits.
While SAED on petrol and aviation turbine fuel remains untouched. Amidst the Red Sea crisis, the reintroduction of duty on diesel exports emphasizes efforts to strengthen reserves amidst the Red Sea crisis.
In July 2022, the fortnightly review mechanism was initiated which ensures that tax rates align with prevailing oil prices, and facilitates timely fiscal adjustments.
The decision was taken amidst a backdrop of differing global oil prices. Brent crude drifting around $81.97 per barrel and the Bharatiya crude oil basket at $83.08 a barrel as of February 14, the market poses challenges.
Predictions from the International Energy Agency (IEA) and the Organisation of the Petroleum Exporting Countries (OPEC) paint varying pictures of the oil market. The OPEC anticipates strong demand growth in 2024 and 2025.
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