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Former finance secretary doesn't expect new windfall tax to go away anytime soon

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Former finance secretary doesn't expect new windfall tax to go away anytime soon

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Former finance secretary, SC Garg, in a conversation with CNBC-TV18, said that the recently introduced windfall tax and other impositions on oil and gas companies to disappear quickly. A windfall tax is a higher tax rate on sudden big profits levied on a particular company or industry.

The recently introduced windfall tax on oil and gas companies won't go away soon, former finance secretary, SC Garg told CNBC-TV18. The government has imposed a Rs 6 per litre tax on the export of petrol and aviation turbine fuel (ATF) and a Rs 13 per litre tax on the export of diesel.

"Normally when the government levies any cess or tax or additional excise duty, it tends to stick, it doesn't change. You recall the increase, which was effected in May 2020. Took two years to be rolled back despite the oil prices going up. So I don't expect the cess or the additional excise duties to go away anytime soon," he reasoned.
The government has also imposed a cess of Rs 23,250 per tonne on domestic crude production. Domestic oil companies have also been told that at least 50 percent of their shipping bills, in a given financial year, have to be reserved for the Indian market.
Oil and gas stocks have been under pressure after this announcement. ONGC fell over 3 percent on Monday when the benchmark index, the Nifty50 has rallied around 100 points.
Former CMD of ONGC RS Sharma said that the only silver lining in the entire situation was that the windfall tax would be reviewed every 15 days.
So, why has the government done this?
The former finance secretary believes that it is to keep excise tax revenues intact at Rs 4 lakh crore.
"I think the government's motivation is very clear. They want to keep their excise tax revenues intact, which is about Rs 3.5-4 lakh crore last year and the discount or the reduction in the excise duty, which was given away now is being sorted," said Garg.
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