New Delhi: India Revenue Secretary Tarun Bajaj told Reuters on Monday that it will roll back its windfall tax introduced last week for oil producers and refiners if global crude prices fall to $40 a barrel from current levels.
The tax on firms looking to increase product exports to benefit from higher overseas margins came into effect from July 1, as the government takes steps to boost domestic supply and revenue.
The tax, along with some export restrictions, will impact earnings of companies such as Reliance Industries, Naira Energy, which is partly owned by Russia’s Rosneft, Oil and Natural Gas Corp, Oil India Ltd and Vedanta Ltd.
“The taxation will be reviewed every 15 days,” Bajaj said. He said it would depend on the international crude oil prices. “If crude oil prices fall, windfall gains will be stopped and windfall taxes will also be removed.”
Bajaj said the government is of the view that such windfall gains will stop once the prices fall by $40 from the current levels.
Brent crude futures slipped to around $111.27 a barrel on Monday as fears of a global recession weighed on the market, even as supplies remain tight amid lower OPEC output, unrest in Libya and sanctions on Russia .
US West Texas Intermediate crude futures were at $108.09 a barrel. [O/R]
Bajaj did not provide any revenue growth forecast for the government from its unexpected tax move.
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