New Delhi: The government may earn more than Rs 1 lakh crore if the government continues to levy cess/duty on crude oil production and crude oil exports. petrol, dieselAnd ATF For the rest of the financial year 2023.
On Friday, the government imposed export tax on petrol, diesel and jet. fuel (ATF) shipped overseas by Reliance Industriesand imposed unexpected tax on crude oil Oil Produced locally by companies like ONGC And Vedanta,
The government imposed a tax of Rs 6 per liter on the export of petrol and ATF and Rs 13 per liter on the export of diesel.
In addition, it levied an additional tax of Rs 23,250 per tonne. crude oil domestic produced. Unconfirmed reports suggest that the excise duty will be applicable on Special Economic Zones as well.
“On an annual basis, we estimate that the government will receive around Rs 1.3 lakh crore (Rs 66,000 crore each from petroleum crude production and exports of petrol, diesel and ATF). The duties will be reviewed on a fortnightly basis. , if the duty/cess continues for the rest of the year, the government could get around Rs 990 billion (based on the FY 2022 data on production and export volumes). The effect is also not expected,” said Upasana Bharadwaj, Economist, Kotak
The export tax follows oil refiners, notably Reliance Industries and Rosneft-backed Naira Energy, which have reduced fuel exports to deficit regions such as Europe and the US following Russia’s invasion of Ukraine.
The refiner is said to have made Russian crude available at a discount after being abandoned by the West, and exported the fuel produced from it to Europe and America. Refiners were exporting petrol and diesel at prices prevailing globally, which are very high.
India imported about 1 million barrels per day (bpd) of crude oil from Russia, up from around 840,000 barrels in May.
The ban on exports is also aimed at curtailing domestic supplies at petrol pumps, some of which had dried up in states such as Madhya Pradesh, Rajasthan and Gujarat as private refiners preferred to export the fuel rather than sell locally.
“The imposition of duty/cess on production of crude oil and export of petrol, diesel and ATF will help offset the losses arising out of reduction in excise duty in petrol and diesel. Assuming that duty/cess will remain in force for the rest of FY 2023 As of now, we estimate excise duty collection at Rs 3.8 lakh crore as compared to our earlier estimate of Rs 2.8 lakh crore. The proceeds will go entirely to the Centre,” Bhardwaj said.
The government has also increased the customs duty on gold imports from 10.75 per cent to 15 per cent.
According to ICRA Chief Economist Aditi Nair, the recent measures by the government will help in preventing the current account deficit from crossing 3 per cent of GDP.
“This will also reduce the depreciation pressure on the rupee,” he said.
The rupee weakened further against the dollar on Friday, crossing the Rs 79 level for the first time.
But why change duty now?
In June, several cities saw ration supply at petrol pumps, while some had to be shut due to non-availability of fuel, raising concerns about shortages and panic buying. By mid-June, the situation worsened and the pumps were instructed to remain open throughout the night.
State-run refiners have kept petrol and diesel prices the same since April 6, despite hike in international crude oil prices and did not pass on the hike in global crude oil prices to consumers.
OMC was incurring huge losses. As losses mounted, downstream oil companies tried to curtail supplies to petrol pump vendors, resulting in fuel shortages at pumps in many states.
A few days back, there were reports from Rajasthan, Madhya Pradesh, Gujarat and Karnataka that due to sudden increase in demand, some petrol pumps are running out of stock. It was learned that petrol retailers such as Jio-BP and Nayara Energy raised their prices to discourage domestic sales and focus on exports, following which the government expanded the scope of Universal Service Obligation (USO) Mandates retailers to be sure. That petrol and diesel are regularly sold at all petrol pumps, even in remote areas. Failure to meet the criteria may result in cancellation of the license.
According to an official notification issued on June 30, “Refiners export these products at prices prevailing globally, which are very high. As exports are becoming highly profitable, it has been observed that some refiners are drying their pumps in the domestic market. In view of this, a cess of Rs 6 per liter on petrol and Rs 13 per liter on diesel has been imposed on their export. These cess will be applicable on any export of diesel and petrol from the country.
Even Finance Minister Nirmala Sitharaman has raised concerns over “unprecedented gains” by domestic oil refineries by cutting domestic sales.
“These are times when international oil prices are unbridled. They’re just going up and over. And for any country, for example India, which largely and heavily depends on imports, we also need to pay that kind of money to get imports”, Sitharaman said on Friday.
(with inputs from agencies)
On Friday, the government imposed export tax on petrol, diesel and jet. fuel (ATF) shipped overseas by Reliance Industriesand imposed unexpected tax on crude oil Oil Produced locally by companies like ONGC And Vedanta,
The government imposed a tax of Rs 6 per liter on the export of petrol and ATF and Rs 13 per liter on the export of diesel.
In addition, it levied an additional tax of Rs 23,250 per tonne. crude oil domestic produced. Unconfirmed reports suggest that the excise duty will be applicable on Special Economic Zones as well.
“On an annual basis, we estimate that the government will receive around Rs 1.3 lakh crore (Rs 66,000 crore each from petroleum crude production and exports of petrol, diesel and ATF). The duties will be reviewed on a fortnightly basis. , if the duty/cess continues for the rest of the year, the government could get around Rs 990 billion (based on the FY 2022 data on production and export volumes). The effect is also not expected,” said Upasana Bharadwaj, Economist, Kotak
The export tax follows oil refiners, notably Reliance Industries and Rosneft-backed Naira Energy, which have reduced fuel exports to deficit regions such as Europe and the US following Russia’s invasion of Ukraine.
The refiner is said to have made Russian crude available at a discount after being abandoned by the West, and exported the fuel produced from it to Europe and America. Refiners were exporting petrol and diesel at prices prevailing globally, which are very high.
India imported about 1 million barrels per day (bpd) of crude oil from Russia, up from around 840,000 barrels in May.
The ban on exports is also aimed at curtailing domestic supplies at petrol pumps, some of which had dried up in states such as Madhya Pradesh, Rajasthan and Gujarat as private refiners preferred to export the fuel rather than sell locally.
“The imposition of duty/cess on production of crude oil and export of petrol, diesel and ATF will help offset the losses arising out of reduction in excise duty in petrol and diesel. Assuming that duty/cess will remain in force for the rest of FY 2023 As of now, we estimate excise duty collection at Rs 3.8 lakh crore as compared to our earlier estimate of Rs 2.8 lakh crore. The proceeds will go entirely to the Centre,” Bhardwaj said.
The government has also increased the customs duty on gold imports from 10.75 per cent to 15 per cent.
According to ICRA Chief Economist Aditi Nair, the recent measures by the government will help in preventing the current account deficit from crossing 3 per cent of GDP.
“This will also reduce the depreciation pressure on the rupee,” he said.
The rupee weakened further against the dollar on Friday, crossing the Rs 79 level for the first time.
But why change duty now?
In June, several cities saw ration supply at petrol pumps, while some had to be shut due to non-availability of fuel, raising concerns about shortages and panic buying. By mid-June, the situation worsened and the pumps were instructed to remain open throughout the night.
State-run refiners have kept petrol and diesel prices the same since April 6, despite hike in international crude oil prices and did not pass on the hike in global crude oil prices to consumers.
OMC was incurring huge losses. As losses mounted, downstream oil companies tried to curtail supplies to petrol pump vendors, resulting in fuel shortages at pumps in many states.
A few days back, there were reports from Rajasthan, Madhya Pradesh, Gujarat and Karnataka that due to sudden increase in demand, some petrol pumps are running out of stock. It was learned that petrol retailers such as Jio-BP and Nayara Energy raised their prices to discourage domestic sales and focus on exports, following which the government expanded the scope of Universal Service Obligation (USO) Mandates retailers to be sure. That petrol and diesel are regularly sold at all petrol pumps, even in remote areas. Failure to meet the criteria may result in cancellation of the license.
According to an official notification issued on June 30, “Refiners export these products at prices prevailing globally, which are very high. As exports are becoming highly profitable, it has been observed that some refiners are drying their pumps in the domestic market. In view of this, a cess of Rs 6 per liter on petrol and Rs 13 per liter on diesel has been imposed on their export. These cess will be applicable on any export of diesel and petrol from the country.
Even Finance Minister Nirmala Sitharaman has raised concerns over “unprecedented gains” by domestic oil refineries by cutting domestic sales.
“These are times when international oil prices are unbridled. They’re just going up and over. And for any country, for example India, which largely and heavily depends on imports, we also need to pay that kind of money to get imports”, Sitharaman said on Friday.
(with inputs from agencies)