New Delhi, June 15 The government has reduced the windfall tax on crude oil to Rs 3,250 per tonne from Rs 5,200 with effect from June 15 as crude oil prices in the international market have fallen compared to the previous two weeks.

Upstream oil exploration and production companies ONGC and Oil India Ltd will benefit from the announcement as they will have to pay the windfall tax on their crude oil production.

The tax is revised every fortnight based on the average crude oil price of the previous fortnight.

In the first two weeks from June 1, the government had reduced the windfall tax on crude oil to Rs 5,200 per tonne from Rs 5,700.

The windfall tax on crude oil was as much as Rs 8,400 in the first half of May, as part of the fortnightly revision aligned with global prices.

This is the second consecutive fortnightly reduction in windfall tax, following a reduction of Rs 8,400 per tonne from Rs 9,600 on May 1.

Starting in July 2022, India began taxing crude oil production and exports of gasoline, diesel and jet fuel to regulate private refiners that wanted to sell fuel abroad rather than locally to take advantage of robust refining margins.

The government had on April 16 increased the windfall tax on crude oil from Rs 6,800 to Rs 9,600 per tonne due to the then high crude oil prices due to escalating geopolitical tensions. Crude oil prices had risen 16 percent in the first quarter of 2024, but have been on a downward trend since then.

The windfall tax was also extended to exports of gasoline, diesel and jet fuel after private refiners began making big profits in overseas markets, instead of selling the fuels domestically.

The government has left the windfall tax on these fuels unchanged in the current round.

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