NEW DELHI: The decision to roll back the windfall tax followed a review by the Prime Minister's Office (PMO), the Revenue Department, and the Petroleum Ministry. It was also accompanied by the withdrawal of the Road and Infrastructure Cess (RIC) on the export of petrol and diesel.
The windfall tax was introduced in July 2022 in response to surging crude oil prices caused by the Russia-Ukraine war and Western sanctions on Russia. The tax rates were revised every fortnight based on international crude oil prices. However, with global crude oil prices stabilizing around USD 70–USD 75 per barrel, the government decided to eliminate the levy.
The rollback is believed to be a response to declining government revenues from the tax, which fell sharply from Rs. 25,000 crore in FY23 to an estimated Rs. 6,000 crore in FY25. The windfall tax was last revised on August 31, when it was set at Rs. 1,850 per tonne for crude petroleum. Export duties on diesel, petrol, and jet fuel had already been reduced to zero as of September 18, signaling the government's intent to phase out the levy.