Windfall profit tax on crude oil, diesel exports cut The government on Thursday cut the windfall profit tax on crude oil produced in the country and on exports of diesel in line with softening international oil prices. The tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil has been reduced to Rs 6,300 per tonne from Rs 9,800 per tonne, according to an official notification. SAED on the export of diesel was reduced to Re 1 per litre from Rs 2 per litre. The levy on the export of jet fuel or ATF and petrol will continue to be zero. The new tax rates came into effect from Thursday. At the last revision effective from November 1, the government had increased the tax on crude oil to Rs 9,800 per tonne from Rs 9,050 per tonne. Simultaneously, the levy on the export of diesel was halved to Rs 2 and that on jet fuel was brought to nil from Re 1 per litre. International oil prices have softened since the last revision, necessitating the reduction. The basket of crude oil that India imports has averaged USD 84.78 per barrel this month as against USD 90.08 a barrel average in the month of October and USD 93.54 in September. A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above USD 75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above USD 20 per barrel. Product cracks or margins are the difference between crude oil (raw material) and finished petroleum products. The levy on domestic crude oil dropped to nil in the first half of April as international crude oil prices fell but was back in the second half in step with a rise in rates. The levy on diesel became nil in April but the levy was brought back in August. Levy on ATF became nil in March and was brought back in the second half of August. The export tax on petrol was scrapped in the very first review. Crude oil pumped out of the ground and from below the seabed is refined and converted into fuels like petrol, diesel and aviation turbine fuel (ATF). Reliance Industries Ltd, which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in the country.
The launched works involve rehabilitating the Galgamuwa Railway Station and upgrading the railway line from Maho to Anuradhapura, including additional tasks. Another project is the second phase of track rehabilitation from Maho to Omanthai (128 kms), funded by a $318 million Indian Line of Credit.
Transport Minister Gunawardena praised the efforts of Indian company IRCON in Sri Lanka and called for more cooperation in the railway sector. State Minister Shantha Bandara and officials from the Sri Lankan Ministry of Transport attended the event.
Railways is a priority for Indian assistance in Sri Lanka, with over $1 billion invested under five Indian Lines of Credit. IRCON has been involved in Sri Lanks since 2009. It has contributed to the modernisation of Sri Lanka Railways by reconstructing the entire railway line network in the Northern Province (253 Km) and upgradation of the Southern line (115 km), as well as improving safety through advanced signalling and telecommunication systems.
Despite Sri Lanka’s debt standstill in April 2022, India’s support under various Lines of Credit has continued.
(With PTI inputs)