Life just got a little harder for oil companies that ship diesel and aviation turbine fuel (ATF) abroad. Effective July 16, the central government has raised the windfall tax charged on the export of both these fuels. At the same time, there is a bit of breathing room for firms exporting petrol, because the export duty on that fuel has been trimmed. The move comes at a moment when crude oil prices on the international market keep swinging up and down amid the tension in West Asia. The change is expected to have a direct bearing on the earnings and export business of the companies that sell these fuels overseas.
The New Rates
According to the Finance Ministry notification, the special additional excise duty on diesel exports has been pushed up from Rs 8.5 per litre to Rs 15.5 per litre. Similarly, the duty on ATF, the fuel used by aircraft, has been raised from Rs 7.5 to Rs 14.5 per litre. Both revised rates have already taken effect from July 16. Petrol, however, got a softer treatment, with its export duty lowered from Rs 4 per litre to Rs 2.5 per litre.
Will Ordinary Consumers Feel It?
If you are worried that this tax reshuffle will make fuel at the pump more expensive, you can relax. This change in the windfall tax will not add any extra burden on ordinary citizens. The Finance Ministry has made it clear that the existing duty rates on petrol and diesel sold for domestic consumption remain untouched. In plain terms, the prices you pay at petrol pumps inside the country will not be affected by this decision.
What It Means for Oil Companies
With the export tax on diesel and ATF going up, the profits of companies that ship these products abroad could come under some pressure. On the other hand, the lower duty on petrol gives the export of that fuel a little relief. The government will not stop here either, it will continue to review these rates every fortnight, that is once every 15 days, keeping an eye on global crude oil prices and the wider international situation.
Why the Government Made This Move
Amid the ongoing tension and crisis in West Asia, the government first imposed an export duty on diesel and ATF on March 27, and it has been reviewing the levy every 15 days since then. Petrol was later brought under the same duty from May 16. The main purpose behind the windfall tax is to make sure that, even as crude prices rise globally because of the West Asia crisis, there is enough fuel available within the country. The government does not want domestic oil companies to sell all their fuel overseas simply to chase heavy profits. Instead, the priority is to meet the country's own needs first and then look at exports.
