NEW DELHI: Government late Tuesday night eliminated export tax of Rs 4 per liter on jet fuel and reduced taxes diesel oil more than halved from Rs 11 per liter to Rs 5, providing relief to exporters such as Reliance Industries Ltd and Rosneft-owned Nayara Energy as global benchmark product prices drop.
At the same time, income tax on domestic crude oil has been increased by Rs 750 per tonne to Rs 17,750, a move that will offset the gains from the recent rally in global oil prices for the homegrown ONGC and Oil India Ltd. countries as well as private producers such as Vedanta.
This is the second adjustment since the tax was imposed on July 1 with the aim of discouraging private refineries from exporting without meeting their domestic obligations amid fuel shortages in the Philippines. states where they have a significant presence. Diesel is levied an export tax of Rs 13 per liter, while a tax of Rs 6 per liter is levied on outgoing shipments of gasoline and jet fuel.
Domestic crude oil is subject to additional excise tax (TO SAED) Rs 23,230 per tonne to suck up what the government calls the “extraordinary profits” that producers are making from the rise in global oil prices since the Ukraine conflict broke out on May 24 2.
As government retailers, which account for more than 90% of the market, continue to sell below cost, private companies ramp up exports and cut domestic sales by starving stores or charging add Rs 3-5 per liter to discourage retail sales and avoid losses.
As a result, state-owned refineries have to import gasoline and diesel to fill the gap left by private companies amid an unprecedented spike in demand even though they are already operating at full capacity. its oil refineries.
“We don’t hate people who make a profit. But if the oil is not available (at the gas pump station) and they are being exported… exported with such extraordinary profits. We need at least some of it for our own citizens and that’s why we’re taking this parallel approach,” said Finance Minister Nirmala Sitharaman explained the rationality of the tax.
On July 20, the export tax was cut following an adjustment in the price of crude oil and an adjustment in the ‘crack’ – the price difference between crude oil and the product, which the broker Citi said it was down 40-50 USD/barrel from a month ago.
The petrol tax has been eliminated, while it is reduced to Rs 11 from Rs 13 for diesel and Rs 4 per liter from Rs 6 for jet fuel. SAED for crude oil produced from domestic fields was also cut to Rs 17,000 per tonne from Rs 23,250.
Export taxes have also been eliminated on products shipped from special economic zones, a big boost for Reliance as about half of its refining capacity is eligible for the exemption.
Immediately after the imposition of taxes, the finance secretary Tarun Bajaj has said that they will be reviewed every two weeks to keep them in line with global standards.