India Raises Windfall Tax on Petroleum Crude Amid Rising Oil Prices

The Indian government has increased the windfall tax on petroleum crude to Rs 6,000 per tonne from Rs 3,250, effective July 2. This change was announced in an official gazette notification issued on Monday.

International crude oil prices are currently at a two-month high. Brent crude is trading near USD 87 a barrel, while West Texas Intermediate is above USD 83. This rise is due to ongoing geopolitical tensions in the Middle East.

Kaynat Chainwala, AVP-Commodity Research at Kotak Securities, stated, “Oil prices might remain buoyed on supply concerns in the event of an escalation in the war.”

The windfall tax, which is reviewed every two weeks, remains zero for diesel, petrol, and aviation turbine fuel. This tax was introduced in July 2022 to regulate private refiners who preferred selling fuel overseas to benefit from high refining margins.