Tarun Kapoor, an advisor to Prime Minister Modi, said India’s finance ministry will consider abolishing the windfall profits tax on domestic crude oil production. This is because the current price of oil is well below the level when the tax was imposed in 2022. Kapoor said that the premise of completely removing the measure of tax on domestic production of crude oil has already been realized. This is because the price of Brent crude is currently around $75 per barrel. It is much lower than the average price of $94.5 per barrel in 2022.
Back in August this year, India’s petroleum ministry had asked the country’s finance ministry to remove the windfall tax levied on crude oil and petroleum products due to the fall in international oil prices. India’s oil ministry has submitted several reports to the finance ministry. The ministry has submitted that Indian oil companies will not make any excess profits in case crude oil prices are below $80 per barrel.
Oil windfall tax was first introduced in India in July 2022. joining other governments in taxing excess profits of energy companies. After the implementation of the oil windfall tax policy, India reassessed the tax rates on crude oil and fuel every two weeks based on the average oil prices of the past two weeks. In addition to domestically produced crude oil, the Government also levies a windfall tax on gasoline, diesel, and aviation turbine fuel.