According to a government notice, the government has cut the windfall tax on crude oil production to zero from Rs 3,500 ($42.56) a tonne starting Tuesday.

The windfall tax on diesel has been reduced to Rs 0.5 per litre from Re 1 earlier. There are no windfall profits taxes on oil and ATF.

When an industry makes huge profits, the government imposes a windfall tax. The tax was introduced last July as high energy prices sent oil producers’ profits soaring.

After that, the windfall tax on crude oil will be reduced from Rs 23,250 per tonne in July 2022 to Rs 3,500 per tonne on March 21, 2023, in line with Brent crude oil prices.

The decision comes amid OPEC+’s decision to cut output. On Monday, the move sent Brent crude up nearly 6% to $84.58 per barrel.

Such a surge would reverse the trend of weaker rates in India’s imported crude oil basket. The prospect of lower gasoline and diesel prices brightened with a basket of Indian crude oil prices hovering in the range of $73-74 per barrel for most of the second half of last month.