‘We have no problem with the export of oil companies but the availability of petrol and diesel in the country is necessary’- says Finance Minister
“We do not mind about profits. But if oil is not available domestically and extravagant profits are being made by exporting it, then our citizens also have some share. That is why we have adopted a bilateral approach,” said Union Finance Minister Nirmala Sitharaman
The Finance Minister said that this is not to discourage imports and certainly this move is not against profit-making. But in extraordinary times such steps are needed.
The government has taken decided
The government has imposed a tax on the export of petrol, diesel-petrol and aviation fuel (ATF) to curb the tendency of some refining companies to sell abroad by ignoring domestic supplies. Along with this, a tax was also announced on windfall gains arising from domestic production of crude oil.
How much tax is levied?
According to a notification issued by the Ministry of Finance, the government has decided to levy tax on the export of petrol and ATF at the rate of Rs 6 per litre and the export of diesel at the rate of Rs 13 per litre.
The new rates have come into effect from July 1. Apart from this, tax has been imposed on domestically produced crude oil at the rate of Rs 23,250 per tonne. Last year, a total of 29 million tonnes of crude oil was produced domestically. Accordingly, the government is likely to get a revenue of Rs 66,000 crore.
According to the Finance Ministry, the benefit of a sharp rise in crude oil prices in recent months has gone to companies that sell oil to domestic refineries at international prices. Due to this, the domestic producers of crude oil are getting windfall profits. In view of this, a cess of Rs 23,250 per tonne has been imposed on crude oil. However, small producers producing less than 20 lakh barrels in the last financial year will be exempted from this new cess.
Why the decision was taken?
One of the reasons behind the decision to tax the export of crude oil, petrol, diesel and ATF have been that refineries like Reliance Industries and Rosneft-backed Naira Energy exported fuel to Europe and America after the Russo-Ukraine war.
Earning huge profits from
The government wants to increase domestic availability by imposing a tax on petroleum exports. After the new tax, petroleum producers will have to pay about 60 per cent of the oil price as tax, including oil industry development cess and royalty. Tax on windfall gains occurs when companies have windfall profits due to extremely favourable market conditions. This tax is collected from companies only once.
Along with this, the government has also said that oil companies exporting petrol will have to sell 50 per cent of the foreign sales in the domestic market in the current financial year. For diesel, this limit has been kept at 30 per cent of exports.