A fortnight after India slashed its windfall profit tax on locally produced crude oil to under a third, it has now raised it sharply to ₹2,300 per tonne from ₹1,300. While periodic reviews make it easy to move the levy in accordance with prevailing price levels, dynamism is no virtue for taxation.

Indeed, this tax needs to be axed in aid of policy stability. State interference in any market ought to be minimal so that demand and supply interact freely and efficiently. With the government tweaking this special tax so frequently, oil businesses must contend with an extra aspect of volatility that hits the accuracy of their financial forecasts for all investors. And while two wars did put this commodity on risk radars, flare-up fears have proven overblown so far.

On Tuesday, oil prices ran up modestly after Iran sent a military vessel to the Red Sea in apparent response to a US strike on three boats of Tehran-backed Houthi rebels who have been attacking cargo ships. As crude prices have been quite calm and US shale supplies strong, an oil shock looks unlikely. The Centre, therefore, should withdraw the special measures it took in the wake of 2022’s oil spike and reduce its market intervention.

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world

QOSHE - India should axe its oil windfall tax - Livemint
menu_open
Columnists Actual . Favourites . Archive
We use cookies to provide some features and experiences in QOSHE

More information  .  Close
Aa Aa Aa
- A +

India should axe its oil windfall tax

9 0
04.01.2024

A fortnight after India slashed its windfall profit tax on locally produced crude oil to under a third, it has now raised it sharply to ₹2,300 per tonne from ₹1,300. While periodic reviews make it easy to move the levy in accordance with prevailing price levels, dynamism is no virtue for taxation.

Indeed, this tax........

© Livemint


Get it on Google Play