Tue Dec 03 02:50:27 UTC 2024: ## India Scraps Windfall Tax on Fuel, Boosting Oil Companies and Potentially Lowering Prices
**New Delhi, [Date of Publication]** – The Indian government has eliminated the windfall tax on aviation turbine fuel (ATF), crude oil products, petrol, and diesel, effective immediately. The decision, announced today, follows the publication of notifications 29/2024 and 30/2024 in Parliament.
Introduced in July 2022 in response to soaring global crude oil prices fueled by the Russia-Ukraine conflict, the Special Additional Excise Duty (SAED), or windfall tax, aimed to capture excess profits from oil producers and exporters. However, government revenue from the tax plummeted from ₹25,000 crore in fiscal year 2023 to a mere ₹6,000 crore in the current fiscal year. With crude oil prices stabilizing around $70-$75 per barrel, the rationale for the tax has diminished, according to sources.
The removal of the tax is expected to significantly benefit major oil producers such as Reliance Industries and ONGC, improving their refining margins. Shares of Reliance Industries saw a positive market reaction following the announcement. The government also scrapped the Road and Infrastructure Cess (RIC) on petrol and diesel exports, completely reversing export levies on fuel.
The move could lead to lower operational costs for airlines, potentially resulting in cheaper airfares. Oil companies may also pass on some savings to consumers, offering relief amid ongoing inflation concerns.
The government’s decision reflects its adaptive fiscal policy, aiming to respond to evolving market conditions while supporting the energy sector and consumer interests. The scrapping of the windfall tax signals a shift towards fostering economic growth within the industry.
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