ONGC & OIL to earn less; govt hikes windfall tax on crude oil

New Delhi: The Union Government has hiked the windfall tax on crude oil to Rs 9,600 per metric ton with effect from Tuesday from Rs 6,800 earlier, as part of its fortnightly revision.

Upstream oil exploration and production companies ONGC (Oil and Natural Gas Corporation) and OIL (Oil India Ltd) stand to lose as they will not get the full benefit of rising international prices for their crude. However, the government on the other hand will get more resources to finance its social welfare schemes for the poor and keep its fiscal deficit in check.

Windfall taxes are levied on additional revenue accruing thanks to factors in the market as a result of developments in the economy and industry.

The government had first imposed the windfall tax on crude oil in July last year and extended the levy on exports of gasoline, diesel and aviation fuel after private refiners started making gains from robust refining margins in overseas markets, instead of selling in the domestic market.

(Input from IANS)