India To Review Scrapping Windfall Tax On Crude Petroleum

The Indian government will review scrapping the windfall tax on crude oil after it cut down the tax payable to nil in the latest notification, Bloomberg News reported.

The oil ministry has sought the removal of windfall tax on crude oil output to the finance ministry, Tarun Kapoor, advisor to the Prime Minister told reporters at the sidelines of the World Biogas Associations' India Conference in New Delhi.

The windfall tax was previously at Rs 1,850 per tonne as of Sept. 17 and was scrapped to Rs 0 per tonne, effective Sept. 18.

India introduced the windfall tax on crude oil in 2022, as a measure aimed to counterbalance the unusually high profits reaped by oil companies from escalating global crude oil prices.

Since these profits arose from factors outside the companies' control, rather than improved performance or innovation, they were considered windfalls.

Every two weeks, the tax rates are reviewed based on the average oil prices from the previous two weeks.

Crude oil prices remained mixed after the US signalled a rise in nationwide crude inventories. Tensions also mount in West Asia as traders expect Israel to retaliate against Iran for a missile strike earlier this month.

Brent crude was trading 0.41% lower at $75.73 a barrel as of 6:00 a.m. IST. West Texas Intermediate was up 2.17% at $72.09.

Crude oil prices remained volatile in October, boosting volatility, with tensions in West Asia raising the risk of supply disruptions in a region that accounts for about a third of world output.