Windfall tax on petrol, diesel scrapped in big relief to Reliance, ONGC

New Delhi: The central government on Monday announced abolition of windfall tax on petrol, diesel, crude oil and aviation turbine fuel (ATF) with immediate effect, a move that will benefit oil producers and refiners like Reliance Industries Ltd (RIL) and Oil & Natural Gas Corporation (ONGC).

Union Minister of State for Finance Pankaj Chaudhary tabled a notification in this regard in the Parliament.

As per the notification, the government has also decided to remove road and infrastructure cess levied on exports of petrol and diesel.

The windfall tax was introduced in July 2022 after the oil prices surged to near record high following the outbreak of Russia-Ukraine war. High prices in the international markets boosted the company’s profits.

The windfall tax used to be reviewed every 15 days based on fluctuations in global crude oil prices. The recent weakening in crude prices had made the windfall tax irrelevant, Tarun Kapoor, an advisor to the Prime Minister, said recently.

“This move marks the end of a levy introduced in July 2022 and aims to provide relief to oil producers and refiners. The decision is expected to benefit major oil players like Reliance Industries and ONGC by boosting their gross refining
margins—a measure of profitability in refining crude oil,” SBI Research said
in a note.

Meanwhile, India’s petrol and diesel consumption, which account for more than half of India’s refined petroleum products usage, rose to a six-month high in November 2024. According to PPAC,

India’s diesel consumption increased by 8% year-on-year to 8.16 million tonnes (MT) in November. Diesel consumption during the month of November was 7% higher when compared with the previous month. The November diesel consumption was the highest since the record consumption in May 2024 (8.4 MT), as per data compiled by Petroleum Planning & Analysis Cell (PPAC).