New Delhi, May 16,2024: The Central government has cut the windfall tax on petroleum crude to 5,700 rupees ($68.34) per metric ton from 8,400 rupees with effect from Thursday, as part of its fortnightly revision that is calibrated with global prices.

This is the second fortnightly cut in windfall tax in a row after a Rs 8,400 per metric ton reduction from Rs 9,600 on May 1.

Upstream oil exploration and production companies ONGC and Oil India Ltd will gain as they will have to pay a lower tax on their crude oil output.

The tax has been scaled down as crude oil prices have declined in the international market and the earnings of oil producers have also come down. Prices of the benchmark Brent crude are currently hovering at a little over $82 per barrel.

The government had on April 16 raised the windfall tax on petroleum crude to Rs 9,600 a metric ton from Rs 6,800 due to the sharp increase in oil prices at the time.

The windfall tax on crude was introduced for the first time in July last year as a sudden spike in prices had increased the earnings of the oil companies and the government wanted to tap part of this gain to reduce the fiscal deficit.

The windfall tax was extended to exports of petrol, diesel and aviation fuel after private refineries started raking in big gains from overseas markets, instead of selling the fuels in the domestic market.

The government has left the windfall tax on these fuels unchanged in the current round.