Budget 2023: Oil industry expects removal of windfall tax

The oil industry is expecting the removal of windfall taxes in Budget 2023-24, which was imposed after crude producers and fuel exporters recorded extraordinary profits.

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After the fluctuation in oil demand and supply due to Russian invasion of Ukraine and Western sanctions, global oil prices rocketed and then dropped as the world economy tanked. Since retail fuel prices stayed stable through 2022, the government imposed windfall taxes on crude producers and fuel exporters’ extraordinary gains.

The oil industry is expecting the government to provide a few relaxations in the upcoming budget 2023-34, some of which are listed below:

• Scrapping of windfall tax on domestic crude and export of petrol, diesel and aviation turbine fuel.
• Restoration of customs duty exemption on items not practically available in the country but essential to oil and gas projects.
• Inclusion of oil and gas in GST as non-inclusion has led to forsaken taxes.

According to Sunil Duggal, Group CEO, Vedanta Ltd, “The budget is a good opportunity to rethink provisions and revise existing policies towards ensuring the country’s energy security. Currently, domestic producers are taxed nearly 70% and a tax structure of 35-40% abiding by global standards will encourage critical investments in the sector”.