With crude prices falling to around $76 a barrel, it can be expected that the Government of India may again lower windfall gains taxes at its next review meeting on December 15, 2022.
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If one compares the two week average — that's what is taking into account for the calculation of windfall taxes — overall, the journey is southwards.
So there's an expectation that in the next review meeting —which keeps happening every two weeks — on December 15, further cut in the windfall gains tax can be expected.
The windfall tax or SAED is a one-off tax imposed by a government on a company or industry when it benefits from something that it is not responsible for, the financial gain that ensues is called windfall profits.
The government on December 1, 2022 had slashed the windfall profit tax to less than half on domestically produced crude oil and also reduced the levy on diesel. The revised tax rates became effective from December 2, 2022.
India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners. Export duties of Rs 6 per litre (USD 12 per barrel) were levied on petrol and ATF and Rs 13 a litre (USD 26 a barrel) on diesel at first and have been revised several times.
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