Government Ends Windfall Tax on Crude Oil and Petroleum Exports

The Indian government has abolished the windfall tax on crude petroleum oil, petrol, diesel, and Aviation Turbine Fuel (ATF), effective November 2, 2024. Additionally, the Road and Infrastructure Cess on the export of petrol and diesel has been scrapped. Initially imposed on July 1, 2022, to curb abnormal profits by oil companies during the Russia-Ukraine war, the tax aimed to stabilize domestic supplies and fund welfare programs. However, its removal follows a review by the PMO, Revenue Department, and Petroleum Ministry, citing stabilizing crude prices and reduced revenue from the tax.

Imposition of the Windfall Tax

Purpose: Introduced to counter oil companies’ excessive profits from selling refined petroleum products internationally during a global price surge.

Impact on Domestic Market: Discouraged exports to ensure domestic supply and control prices.

Revenue Utilization: The tax revenue funded government welfare schemes.

Reasons for Scrapping the Tax

Stabilized Prices: Crude oil prices in the international market have stabilized, reducing the likelihood of abnormal profits.

Declining Revenue: Collection from the windfall tax dropped from ₹25,000 crore in 2022-23 to ₹6,000 crore in 2024-25.

Industry Opposition: Domestic producers like ONGC and Reliance Industries argued that the tax hindered profitability and discouraged production.

Investor Concerns: It created uncertainty for both domestic and foreign investors in the petroleum sector.

Understanding Windfall Tax

Definition: A special tax on companies gaining excessive profits due to sudden price spikes.

Relevance in India: Applied to companies whose earnings surged due to the global linkage of domestic crude oil prices with international rates.

Summary of the news

Key Point Details
Why in News The Government of India abolished the windfall tax on crude oil, petrol, diesel, and ATF on November 2, 2024.
Windfall Tax Imposition Introduced on July 1, 2022, during the Russia-Ukraine war to curb abnormal profits of oil companies.
Reason for Removal Stabilized global crude oil prices, declining revenue (₹25,000 crore in 2022-23 to ₹6,000 crore in 2024-25), and industry opposition.
Purpose of Tax Discouraged exports of petroleum products, ensured domestic supply, and funded welfare programs.
Revenue Mechanism Tax rates reviewed every 15 days based on international crude oil prices.
Domestic Producers Affected ONGC, Oil India Limited, Vedanta Limited, and exporters like Reliance Industries Limited.
Definition of Windfall Tax A special tax on companies earning abnormal profits due to sudden price spikes.
Piyush Shukla

Recent Posts

Weekly One Liners 15th to 21st of December 2025

Weekly Current Affairs One-Liners Current Affairs 2025 plays a very important role in the competitive…

12 hours ago

World Basketball Day 2025 Celebrates Basketball’s Journey to Global Fame

World Basketball Day 2025 highlights the remarkable journey of basketball from a simple indoor game…

1 day ago

UN Celebrates Second World Meditation Day to Promote Inner Peace Worldwide

The United Nations marked the second World Meditation Day on the 21st December with a…

1 day ago

Winter Solstice 2025 Observed on Sunday, Bringing the Year’s Shortest Day

The Winter Solstice 2025 occurs on Sunday, December 21 marking the shortest day and longest…

1 day ago

Haryana Assembly Passes Resolution to Commemorate 350th Martyrdom Year of Guru Tegh Bahadur Ji

The Haryana State Assembly has unanimously passed a resolution to mark the 350th martyrdom year…

2 days ago

Which Country is Known as the Land of Cherry Blossoms?

Every country has something special that makes it famous around the world. Some are known…

2 days ago