Windfall tax lower on oil producers on anticipated traces; hike in levy on ATF, diesel exports surprises analysts

On the third fortnightly assessment, the federal government has elevated the windfall revenue tax on the export of diesel to Rs 7 per litre from Rs 5 a litre and introduced a Rs 2 a litre tax on ATF exports.

Earlier this month, the federal government had scrapped the windfall revenue tax on ATF (Aviation Turbine Gas) exports.

Alongside, the tax on domestically produced crude oil has been lower to Rs 13,000 per tonne from Rs 17,750.

“The rise in jet gas and diesel export tax, which displays the current rise in refining margins, stunned us as native markets are moderately effectively equipped,” Morgan Stanley mentioned in a report.

The decline in oil costs led to a downward revision in windfall taxes on home oil manufacturing from USD 31 per barrel to USD 22.

“The changes, whereas nonetheless adhoc, spotlight producer oil value cap of USD 70-75 a barrel and profitability of USD 20-21 per barrel,” it mentioned.

The export tax on diesel and jet gas was raised by USD 4 per barrel to USD 14 a barrel and USD 4, respectively, as refinery margins for these merchandise have risen.

‘s Gross Refining Margins (GRMs) below the brand new tax regime must be at the moment operating at USD 14 per barrel and the upcycle in refining is predicted to learn and oil entrepreneurs, it mentioned.

The tax on exports has been raised as cracks or margins rose however the identical on domestically produced oil was decreased as worldwide oil costs slid to a six-month low.

India first imposed windfall revenue taxes on July 1, becoming a member of a rising variety of nations that taxes tremendous regular income of vitality corporations. However worldwide oil costs have cooled since then, eroding the revenue margins of each oil producers and refiners.

On July 1, export duties of Rs 6 per litre (USD 12 per barrel) had been levied on petrol and ATF and a Rs 13 a litre tax on the export of diesel (USD 26 a barrel). A Rs 23,250 per tonne windfall revenue tax on home crude manufacturing (USD 40 per barrel) was additionally levied.

Thereafter, within the first fortnightly assessment on July 20, the Rs 6 a litre export responsibility on petrol was scrapped, and the tax on the export of diesel and jet gas (ATF) was lower by Rs 2 per litre every to Rs 11 and Rs 4, respectively. The tax on domestically produced crude was additionally lower to Rs 17,000 per tonne.

On August 2, the export tax on diesel was lower to Rs 5 a litre and that on ATF scrapped, following a drop in refinery cracks or margins. However the levy on domestically produced crude oil was raised to Rs 17,750 per tonne consistent with a marginal improve in worldwide crude costs.

On the third fortnightly assessment now, the taxes on gas exports has been raised however that on domestically produced crude oil has been lower.

Worldwide oil costs have since then slid to under USD 95 per barrel however cracks on diesel and ATF rose.