New Delhi: The government on Friday imposed export tax on petrol and diesel, as some refineries made “unprecedented profit” shipping abroad at the cost of domestic supplies, and put in Rs 66,000 crore. unexpected tax on crude oil Locally produced oil.
The Rs 6 per liter tax on export of petrol and ATF and Rs 13 per liter tax on export of diesel is effective from July 1, the finance ministry notification showed.
Additionally, domestically produced crude oil was taxed at Rs 23,250 per tonne, up from around 29 million tonnes at last year’s production level, which translates to an annual revenue of Rs 66,000 crore to the government.
Continuing the trend of exports of 5.7 million tonnes of diesel and 2.5 million tonnes of petrol in the first two months of the fiscal year that began in April 2022, for the full financial year, the unexpected tax on crude oil and revenue from export levies should be neutralised. The government lost Rs 1 lakh crore on the withdrawal of the pandemic-era hike in excise duty on petrol and diesel.
export tax is to prevent companies like Reliance Industries and Rosneft’s Naira Energy preferred overseas markets over domestic supplies.
Finance Minister stating the reasons for the introduction of new taxes Nirmala Sitharaman Said that the “unprecedented profit” earned from unusual prices that refiners earned from shipping overseas led to new taxes.
“We’re not angry with people making profits,” she said. “But if oil is not becoming available (at petrol pumps) and they are being exported…with such phenomenal profits, we need at least something for our citizens and that’s it. That is why we have taken this dual approach.”
Sitharaman said, “This is not to discourage exports, this is not to discourage India as a purification centre. It is certainly not against profit making, but some such steps are needed in extraordinary times.” is required.”
Unexpected taxes on oil producers triggered by the reporting of bumper profits in the March quarter (when international prices hit a 14-year high of $139 a barrel) and Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) by the oil producers went. Earnings in 2021-22.
ONGC reported a record net profit of Rs 40,306 crore on revenue of Rs 1,10,345 crore in the financial year 2021-22. OIL made a net profit of Rs 3,887.31 crore in the financial year. Vedanta’s Cairn Oil & Gas, which is India’s second largest oil producer, also made bumper earnings.
The new levy plus oil industry development cess and royalties currently paid by producers will bring the total incidence of taxation to about 60 percent of the price of oil.
Windfall tax is a one-time tax on companies that have seen their profits increase exceptionally, not because of any smart investment decisions made by them or an increase in efficiency or innovation, but simply because of favorable market conditions.
Most recently, the UK imposed a 25 percent tax on “extraordinary” profits from North Sea oil and gas production to raise $6.3 billion.
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.
Russian crude is said to have been processed at a discount after it was abandoned by the West and the fuel produced from it was exported to Europe and America.
The government also framed new rules for selling petrol in the domestic market to oil companies exporting petrol in the domestic market equal to 50 per cent of the amount sold to foreign customers for the financial year ending March 31, 2023. For diesel, this requirement is kept at 30. Percentage of quantity exported.
These restrictions on exports are aimed at reducing 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 to sell locally.
Priority was given to exports as the retail petrol and diesel prices are kept below cost by major public sector retailers. This means that private retailers, which control less than 10 percent of the market share, either sell fuel at a loss or lose market share if they have to sell at a higher price.
Revenue Secretary Tarun Bajaj said the export tax would be applicable equally to all exports from any refinery – be it a domestic unit or export only (SEZ) facility. But the export ban, mandating a certain amount to be sold locally, will not be applicable for SEZ units, he said.
Reliance operates two refineries in Jamnagar, Gujarat – one is a domestic tariff zone facility while the other is an SEZ refinery. Naira has a domestic tariff area unit at Vadinar, Gujarat.
The finance ministry said in a statement that crude oil prices have risen sharply in recent months, benefiting domestic producers who sell oil to domestic refineries at international parity prices.
As a result, domestic crude producers are getting windfall profits. Keeping this in mind, a cess of Rs 23,250 per tonne has been imposed on crude oil. “Import of crude oil will not be subject to this cess.”
The ministry said that small producers, whose annual crude oil production in the last financial year is less than 2 million barrels, will be exempted from this new cess.
“Furthermore, to encourage additional production over the previous year, no cess shall be levied on such quantity of crude oil which is produced by the crude producer in excess of the production of the previous year.”
The ministry said that while crude oil prices have increased sharply in recent months, there has been a sharp rise in diesel and petrol prices.
It said, without naming any company, “Refiners export these products at globally prevailing prices, which are very high. Exports are turning out to be highly profitable, it has been observed that some refiners dry their pumps in the domestic market. are.”
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.
“These measures will not have any adverse impact on the domestic retail prices of diesel and petrol. Thus, the domestic retail prices will remain unchanged. Also, these measures will ensure domestic availability of petroleum products.”
A Special Additional Excise Duty (SAED) of Rs 6 per liter has been imposed on the export of Aviation Turbine Fuel (ATF). Like diesel and petrol, the international prices of ATF have risen sharply and hence an additional duty has been levied.
The Rs 6 per liter tax on export of petrol and ATF and Rs 13 per liter tax on export of diesel is effective from July 1, the finance ministry notification showed.
Additionally, domestically produced crude oil was taxed at Rs 23,250 per tonne, up from around 29 million tonnes at last year’s production level, which translates to an annual revenue of Rs 66,000 crore to the government.
Continuing the trend of exports of 5.7 million tonnes of diesel and 2.5 million tonnes of petrol in the first two months of the fiscal year that began in April 2022, for the full financial year, the unexpected tax on crude oil and revenue from export levies should be neutralised. The government lost Rs 1 lakh crore on the withdrawal of the pandemic-era hike in excise duty on petrol and diesel.
export tax is to prevent companies like Reliance Industries and Rosneft’s Naira Energy preferred overseas markets over domestic supplies.
Finance Minister stating the reasons for the introduction of new taxes Nirmala Sitharaman Said that the “unprecedented profit” earned from unusual prices that refiners earned from shipping overseas led to new taxes.
“We’re not angry with people making profits,” she said. “But if oil is not becoming available (at petrol pumps) and they are being exported…with such phenomenal profits, we need at least something for our citizens and that’s it. That is why we have taken this dual approach.”
Sitharaman said, “This is not to discourage exports, this is not to discourage India as a purification centre. It is certainly not against profit making, but some such steps are needed in extraordinary times.” is required.”
Unexpected taxes on oil producers triggered by the reporting of bumper profits in the March quarter (when international prices hit a 14-year high of $139 a barrel) and Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) by the oil producers went. Earnings in 2021-22.
ONGC reported a record net profit of Rs 40,306 crore on revenue of Rs 1,10,345 crore in the financial year 2021-22. OIL made a net profit of Rs 3,887.31 crore in the financial year. Vedanta’s Cairn Oil & Gas, which is India’s second largest oil producer, also made bumper earnings.
The new levy plus oil industry development cess and royalties currently paid by producers will bring the total incidence of taxation to about 60 percent of the price of oil.
Windfall tax is a one-time tax on companies that have seen their profits increase exceptionally, not because of any smart investment decisions made by them or an increase in efficiency or innovation, but simply because of favorable market conditions.
Most recently, the UK imposed a 25 percent tax on “extraordinary” profits from North Sea oil and gas production to raise $6.3 billion.
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.
Russian crude is said to have been processed at a discount after it was abandoned by the West and the fuel produced from it was exported to Europe and America.
The government also framed new rules for selling petrol in the domestic market to oil companies exporting petrol in the domestic market equal to 50 per cent of the amount sold to foreign customers for the financial year ending March 31, 2023. For diesel, this requirement is kept at 30. Percentage of quantity exported.
These restrictions on exports are aimed at reducing 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 to sell locally.
Priority was given to exports as the retail petrol and diesel prices are kept below cost by major public sector retailers. This means that private retailers, which control less than 10 percent of the market share, either sell fuel at a loss or lose market share if they have to sell at a higher price.
Revenue Secretary Tarun Bajaj said the export tax would be applicable equally to all exports from any refinery – be it a domestic unit or export only (SEZ) facility. But the export ban, mandating a certain amount to be sold locally, will not be applicable for SEZ units, he said.
Reliance operates two refineries in Jamnagar, Gujarat – one is a domestic tariff zone facility while the other is an SEZ refinery. Naira has a domestic tariff area unit at Vadinar, Gujarat.
The finance ministry said in a statement that crude oil prices have risen sharply in recent months, benefiting domestic producers who sell oil to domestic refineries at international parity prices.
As a result, domestic crude producers are getting windfall profits. Keeping this in mind, a cess of Rs 23,250 per tonne has been imposed on crude oil. “Import of crude oil will not be subject to this cess.”
The ministry said that small producers, whose annual crude oil production in the last financial year is less than 2 million barrels, will be exempted from this new cess.
“Furthermore, to encourage additional production over the previous year, no cess shall be levied on such quantity of crude oil which is produced by the crude producer in excess of the production of the previous year.”
The ministry said that while crude oil prices have increased sharply in recent months, there has been a sharp rise in diesel and petrol prices.
It said, without naming any company, “Refiners export these products at globally prevailing prices, which are very high. Exports are turning out to be highly profitable, it has been observed that some refiners dry their pumps in the domestic market. are.”
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.
“These measures will not have any adverse impact on the domestic retail prices of diesel and petrol. Thus, the domestic retail prices will remain unchanged. Also, these measures will ensure domestic availability of petroleum products.”
A Special Additional Excise Duty (SAED) of Rs 6 per liter has been imposed on the export of Aviation Turbine Fuel (ATF). Like diesel and petrol, the international prices of ATF have risen sharply and hence an additional duty has been levied.