Incremental revenues from windfall tax overestimated: Govt officials

Government officials have termed the Rs.948 billion gains from windfall tax estimated by Moody’s Investors Service an overestimation, as per a report in Business Standard. They are of the view that the Rs.948 billion estimate does not take into account the consequent revenue loss to the Centre in the form of corporation tax post introduction of this windfall tax. On 1 July 2022, the government had imposed windfall tax on domestic production of crude at Rs.23,250 per tonne and on the export of petrol, diesel, and aviation turbine fuel (ATF) at the rate of Rs.6, Rs.13 and Rs 10 per litre, respectively. This was expected to yield Rs.948 billion as per Moody’s. According to officials, the government would have earned less than Rs.480 billion during July 2022-March 2023 if the windfall tax rates remained constant. On 20 July 2022, the Centre reduced the windfall tax on diesel and aviation fuel shipments by Rs.2 per litre and scrapped the Rs.6 per litre levy on gasoline exports completely. The officials further stated that now since the rates have been reduced, the government will get less revenue. Although, it is difficult to determine any exact figure as things will change based on oil price movement, they added.