The government cut a windfall tax on domestic crude oil on December 16 and lowered taxes on diesel. The revised tax rates are effective from December 16, 2022.

Taxes on crude oil produced by companies such as the state-owned Oil and Natural Gas Corporation (ONGC) have been reduced to Rs 1,700 per ton from the current Rs 4,900 per ton, according to a government notification.

In the fortnightly windfall tax revision, the government reduced the diesel export duty rate from Rs 8 per litre to Rs 5 per litre. The levy includes a road infrastructure levy of Rs 1.5 per litre.

According to the notification, the windfall tax on aviation turbine fuel has been reduced from Rs 5 per litre to Rs 1.5 per litre.

Since the windfall profits tax was introduced, the government has revised the windfall profits tax almost every two weeks. After the latest revision, taxes on petroleum produced in domestic fields were reduced by approximately 65%.

The windfall tax is calculated by removing any price producers exceed a threshold.

India imposed a windfall profits tax for the first time on July 1, becoming one of a growing number of countries taxing excess profits from energy companies. At that time, an export tax of Rs 6 per litre ($12 per barrel) was levied on petrol and ATF, and Rs 13 per litre ($26 per barrel) on diesel. A windfall profit tax of Rs 23,250 ($40 per barrel) per tonne was also imposed on domestic crude oil production.