Indian Government Reduces Windfall Tax on Crude Petroleum, LPG Cylinder Prices Slashed

India cuts windfall tax on crude, reduces commercial LPG prices amid global oil fluctuations, providing relief to the public.

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Ayesha Mumtaz
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Indian Government Reduces Windfall Tax on Crude Petroleum, LPG Cylinder Prices Slashed

Indian Government Reduces Windfall Tax on Crude Petroleum, LPG Cylinder Prices Slashed

On May 1, 2024, the Indian government announced a reduction in the windfall tax on crude petroleum from Rs 9,600 to Rs 8,400 per tonne. The windfall tax, which is revised every fortnight, was left unchanged at zero for diesel and aviation turbine fuel. This decision follows a previous increase in the windfall tax on April 16, when the government had reduced the levy on petroleum crude.

Coinciding with the windfall tax reduction, oil marketing companies (OMCs) decreased the cost of commercial across the country. In New Delhi, the price of a 19-kg commercial LPG cylinder was reduced by Rs 19, bringing the retail price down to Rs 1,745.50. Similar price reductions were observed in other major cities, with the price in Mumbai dropping to Rs 1,698.50, in Chennai to Rs 1,911, and in Kolkata to Rs 1,859.

The decrease in LPG cylinder prices is attributed to the recent fall in global oil prices, which serve as a benchmark for domestic fuel prices. This marks the third consecutive day of oil price reductions, as reported on Wednesday. Brent crude futures for July fell 47 cents, or 0.5%, to $85.86 a barrel, while U.S. West Texas Intermediate crude for June decreased by 52 cents, or 0.6%, to $79.11 per barrel.

Why this matters: The reduction in the windfall tax and the lowering of commercial LPG cylinder prices by Rs 19 are aimed at providing relief to the public amidst fluctuations in global oil prices and changes in tax laws. As high fuel and oil prices have a ripple effect on the prices of essential food items and other commodities, these measures have significant implications for the Indian economy and the general population.

Various factors, including changes in international oil prices, shifts in taxation policies, and supply-demand dynamics, influence these price adjustments. The Indian government's proactive measures aim to ensure the resilience and sustainability of the energy sector amidst evolving market dynamics and geopolitical developments. The opposition party, Congress, has often criticized the ruling BJP-led government for failing to control fuel prices, highlighting the reduction of 19 kg LPG cylinder prices by Rs 19 in Delhi from May 1.

Key Takeaways

  • India cuts windfall tax on crude petroleum from Rs 9,600 to Rs 8,400 per tonne.
  • Windfall tax on diesel and aviation turbine fuel remains unchanged at zero.
  • OMCs decrease commercial LPG cylinder prices by Rs 19 in major cities.
  • Price reduction due to recent fall in global oil prices, a benchmark for domestic fuel.
  • Measures aim to provide relief amidst fluctuations in global oil prices and tax laws.