Windfall Tax Slash By 54%: Oil Marketing & Producing Companies Share In Focus For Next Trading Session

The windfall tax on petroleum crude has been reduced by the central government to Rs 2,100 per tonne, as announced in a notification late on August 16.

This represents a 54 per cent decrease from the windfall tax of Rs 4,600 per tonne that has been applied to petroleum crude since the beginning of this month. According to the notification, the new rates will take effect on August 17.

Exempt from windfall tax

However, Indian refiners continue to be exempt from paying any windfall tax on the sale of diesel and aviation turbine fuel (ATF).

After refiners made superprofits from the export of crude at high international prices, the Indian government started enforcing the Special Additional Excise Duty (SAED), also known as the windfall tax, in July 2022. The action is intended to guarantee a sufficient supply for the home market.

@ANI Sharp cut in windfall tax on crude petroleum, effective today
Read @ANI Story lhttps://t.co/Q4NY9uCr0Y#Crudeoil #petroleum #windfalltax pic.twitter.com/WIdfFCTEIC

— ANI Digital (@ani_digital) August 17, 2024

Every two weeks, the average worldwide oil price for the previous two weeks is factored into the revision of the tax rates.

International crude oil prices decreased on Friday; Brent futures closed 1.8 per cent lower at USD 79.58 per barrel. At USD 76.65 per barrel, US West Texas Intermediate (WTI) futures also ended the day 1.9 per cent lower.

Oil stock in focus for next trading session

Indian refiners are anticipated to gain from the decrease in windfall tax on petroleum crude, as this will increase the margins on its export. This will maintain attention on oil stocks during Monday’s early trading session on August 19.

Oil stock’s historic reactions

The shares of oil marketing companies (OMCs) have historically dropped in the following trading session when the SAED on petroleum crude has increased. However, OMCs’ increase in trading at the bourses has coincided with its decrease.

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Notably, oil stocks ended Friday’s trading session higher. On the NSE, BPCL finished 2.29 per cent higher at Rs 332.5 per share, while HPCL finished 1.81 per cent higher at Rs 379.85.

Indian Oil surged 2.09 per cent to Rs 167.17 per share, while ONGC finished the day’s trading at Rs 329.6, up 0.44 per cent.