In a recent development, the government increased the windfall tax by ₹1,500/tonne. Earlier, the tax was ₹1,700/tonne, and currently, from February 3rd, the Crude Oil tax will be ₹3,200/tonne. The windfall tax on diesel and aviation turbine fuel (ATF) will be the same as before, zero. Aviation turbine fuel is used in jets and airplanes. The government first introduced the windfall tax in July 2022, after the Russia-Ukraine war broke out. After the war started, the crude oil price fluctuated a lot, making companies generate huge profits because of the price fluctuation per barrel.
The government implements the windfall Crude Oil tax only after some unexpected event happens, and that event somehow gives the companies massive profits. The windfall tax helps the government control the profits of the company.
In January, the government changed the tax, making it ₹2,300/tonne from ₹1,300/tonne, and again in January, the government reduced the windfall tax to ₹1,700/tonne from ₹2,300/tonne.
The government revised the tax every two weeks; this stopped the private companies from exploiting the profit sharing and selling of gasoline and other products to the international market rather than selling them domestically.
In September 2023, the crude oil barrel price was touching $97 per barrel, and currently, the price of the barrel is $77 per barrel. In between, the price is also nearing its 52-week low. The government makes decisions based on the barrel price and increases and decreases the windfall tax.
The main private player and biggest exporter is the well-known reliance industry. On the other hand, the reliance industry only has more than 5% market share in the Indian retail market. Further, the reliance industry is trying to capture around 10% of the retail market in India.