Crude windfall tax cut to nil; may return as oil rises

The government has slashed windfall tax on domestically produced crude oil to zero for the first time since it was levied on July 1, 2022 due to softening of average international oil prices in its fortnightly review, two officials familiar with the development said on Tuesday, adding that the levy could be reimposed if international oil prices rise.

The windfall tax was cut to nil because the average crude oil price fell sharply in the previous fortnight. But, international crude prices have soared again after the Organisation of the Petroleum Exporting Countries (OPEC) and its allies such as Russia (together called OPEC+) pledged to cut output from next month to keep oil prices artificially high. If prices rise, the levy will automatically be restored, the officials said, requesting anonymity.

The government adjusts the levies twice a month by aligning them to global oil price movements.