Upstream oil exploration and production companies ONGC and Oil India Ltd will benefit from the announcement as they have to pay the windfall tax on their crude oil output.
The tax is revised every fortnight based on the average crude price of the preceding fortnight.
In the earlier fortnight beginning June 1, the government had reduced the windfall tax on crude to INR 5,200 per metric tonne from INR 5,700.
The windfall tax on crude was as high as INR 8,400 in the first fortnight of May as part of its fortnightly revision that is calibrated with global prices.
This is the second fortnightly cut in windfall tax in a row after a INR 8,400 per metric tonne reduction from INR 9,600 on May 1.
From July 2022, India started taxing crude oil production and exports of gasoline, diesel and aviation fuel to regulate private refiners which wanted to sell fuel overseas instead of locally to gain from robust refining margins.
The government had on April 16 raised the windfall tax on petroleum crude to INR 9,600 a metric ton from INR 6,800 because of the high crude oil prices at the time due to escalating geopolitical tensions. Crude prices had risen by 16 per cent in the first quarter of 2024 but have trended downward since then.
The windfall tax was also extended to exports of petrol, diesel and aviation fuel after private refineries started raking in big gains from overseas markets, instead of selling the fuels in the domestic market.
The government has left the windfall tax on these fuels unchanged in the current round.
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