The government has reduced the windfall tax on petroleum crude from Rs 4,600 per ton to Rs 2,100 per metric ton, effective today, Saturday, August 17, 2024, as per an official gazette notification.
A windfall tax is imposed by governments on industries that experience unexpected profits, often due to extraordinary circumstances, reported news agency ANI. Recently, oil prices dropped by approximately 2% on Friday, with Brent crude falling below $80 a barrel. In the international market, Brent crude futures decreased by around 2% to $78.37 per barrel. This decline is attributed to the slowing down of China’s economy, which has impacted the crude market. China’s economy lost momentum in July, with new home prices falling at the fastest pace in nine years. As a result, traders are concerned about reduced demand from top oil importers like China.
In response, the Organization of the Petroleum Exporting Countries (OPEC) revised its global crude oil demand forecast last week, expecting oil demand in 2024 to be around 135,000 barrels per day. The windfall tax is typically reviewed every two weeks. Currently, the tax remains unchanged at zero for diesel, petrol, and aviation turbine fuel. India introduced the windfall tax in July 2022 to regulate private refiners that prioritized selling fuel overseas to capitalize on favorable refining margins, rather than supplying the local market.
(With inputs from ANI)