Thursday, August 18, 2022

A $12 billion bonanza for the Indian government from tax on crude

“Significant additional tax revenue will offset fiscal pressure on the sovereign.”

PRAVASISAMWAD.COM

Taxes on domestic crude oil and fuel exports will generate close to $12 billion (Rs 94,800 crore) for the government in the remainder of the current fiscal, according to Moody’s Investors Service.

“The tax increase will reduce the profits of Indian crude producers and oil exporters like Reliance Industries Limited (RIL) and ONGC.”

— Moody’s

The additional revenue will help offset the negative impact of the reduction in excise duties for petrol and diesel announced in late May to tame soaring inflation. “Significant additional tax revenue will offset fiscal pressure on the sovereign,” Moody’s said.

On July 1, the government imposed a “windfall” tax on the export of petrol, diesel and aviation turbine fuel (ATF), as well as on domestically produced crude oil. “The tax increase will reduce the profits of Indian crude producers and oil exporters like Reliance Industries Limited (RIL) and ONGC,” Moody’s said in a note on the new taxes.

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