India cuts windfall tax on Fuel exports
Context
The Indian government has cut the recently imposed cesses and levies on diesel and aviation turbine fuel (ATF) and removed the cess on exports of petrol.
What is Windfall Tax?
- A windfall tax is a higher tax rate on sudden big profits levied on a particular company or industry.
- Domestic producers sell crude oil to domestic refineries at international parity prices, thus making windfall gains.
Background
- Due to the Global crude prices are rising and domestic crude producers were making windfall gains, the government is trying to back the economy from recession.
- Private oil marketing companies were exporting petrol and diesel to foreign countries like Australia for better realisation.
- The shortage of fuel at retail outlets because of the oil marketing companies were not willing to sell the commodity at a loss since prices had not increased despite rising crude and depreciating rupee.
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