Oil Companies benefit as Centre cuts windfall tax on crude, will it trickle down to consumer?

The Central authorities has diminished the windfall tax on petroleum crude to 5,700 rupees ($68.34) per metric ton from the earlier 8,400 rupees, efficient from Thursday, as a part of its fortnightly changes aligned with international costs.

This marks the second consecutive fortnightly discount within the windfall tax, following a lower from 9,600 rupees to 8,400 rupees on May 1.

Companies concerned in upstream oil exploration and manufacturing, such as ONGC and Oil India Ltd, stand to benefit from the decrease tax imposed on their crude oil output.

The adjustment within the tax price is available in response to the decline in worldwide crude oil costs, leading to diminished earnings for oil producers. Currently, the benchmark Brent crude costs hover barely above $82 per barrel.

Earlier, on April 16, the federal government had raised the windfall tax on petroleum crude to 9,600 rupees per metric ton from 6,800 rupees due to a major surge in oil costs.

Introduced for the primary time in July final yr, the windfall tax aimed to seize a portion of the elevated earnings of oil firms amidst sudden value spikes, thereby aiding in decreasing the fiscal deficit.

Following the success of the initiative, the windfall tax was prolonged to cowl exports of petrol, diesel, and aviation gasoline as effectively, notably focusing on non-public refineries benefiting from profitable abroad markets over home gross sales.

In the present adjustment, the federal government has opted to preserve the windfall tax price on these fuels with none adjustments however the query of it reaching the retail shopper is unlikely as petrol costs stay market-sensitive and never pre-determined.

(With inputs from IANS)