The Indian government has made adjustments to the windfall profit tax concerning domestically produced crude oil and diesel exports, aligning them with the recent downward trend in international oil prices. As per an official notification, the Special Additional Excise Duty (SAED) imposed on domestically produced crude oil has been reduced to Rs 6,300 per tonne from the previous Rs 9,800 per tonne. Additionally, the SAED on diesel exports has been lowered from Rs 2 per litre to Re 1 per litre.

Effective from Thursday, these revised tax rates have come into effect. This alteration follows the recent change made on November 1, where the government had elevated the tax on crude oil to Rs 9,800 per tonne from the earlier Rs 9,050 per tonne. Simultaneously, the duty on diesel exports was halved to Rs 2, while the tax on jet fuel was brought down to nil from Re 1 per litre.

The decline in international oil prices necessitated this reduction. The basket of crude oil imported by India averaged USD 84.78 per barrel this month, notably lower than the USD 90.08 per barrel in October and USD 93.54 per barrel in September.

Last year, on July 1, India initiated windfall profit taxes, joining several other nations in taxing the exceptional profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) were imposed on petrol and ATF, and Rs 13 per litre (USD 26 per barrel) on diesel. Additionally, a windfall profit tax of Rs 23,250 per tonne (USD 40 per barrel) was imposed on crude oil produced by entities such as Oil and Natural Gas Corporation (ONGC).

These tax rates undergo review every fortnight based on the average oil prices of the previous two weeks. The windfall tax is applied on domestic crude oil if global benchmark rates surpass USD 75 per barrel. Similarly, diesel, ATF, and petrol exports incur the levy if product margins rise above USD 20 per barrel.

While the export tax on petrol was eliminated in the initial review, the levy on domestic crude oil was zero in the first half of April when international prices dropped, but reinstated in the latter half due to rate increases. Similar fluctuations occurred for diesel and ATF exports, with the levy being removed and reintroduced in different periods throughout the year.

The refined fuels, such as petrol, diesel, and aviation turbine fuel (ATF), are derived from crude oil extracted from underground or seabed sources. Notably, Reliance Industries Ltd and Nayara Energy, backed by Rosneft, are among the prominent exporters of fuel in India, with Reliance operating the world's largest single-location oil refinery complex in Jamnagar, Gujarat.