Government Slashes Additional Excise Duty on Domestic Crude Oil, Adjusts Tax Rates

The government has taken steps to modify the tax landscape for the energy sector. The windfall profit tax on domestically produced crude oil and diesel exports has been revised, as announced in an official notification on Monday.

The Special Additional Excise Duty (SAED) on domestically produced crude oil has undergone a substantial reduction, plummeting from ₹5,000 per tonne to ₹1,300. Simultaneously, the SAED on diesel exports has seen a noteworthy decrease, now standing at ₹0.50 per litre compared to the previous ₹1 per litre.

Conversely, there has been an adjustment in the SAED on the export of aviation turbine fuel (ATF), which has been increased to ₹1 per litre from nil earlier.

It is important to note that the SAED on petrol remains unchanged at zero. These revised tax rates are set to be implemented starting Tuesday.

This move comes as part of the government's ongoing efforts to respond dynamically to economic conditions. The windfall profit taxes were initially introduced on July 1 last year, aligning India with other nations that impose taxes on supernormal profits generated by energy companies.

The tax rates will continue to be subject to review every fortnight, with adjustments made based on the average oil prices observed in the preceding two weeks. This agile approach ensures that the taxation framework remains responsive to the evolving dynamics of the energy sector and global oil markets.