“The increase in jet fuel and diesel export tax, which reflects the recent rise in refining margins, surprised us as local markets are reasonably well supplied,” Morgan Stanley said in a report.
The decline in oil prices led to a downward revision in windfall taxes on domestic oil production from USD 31 per barrel to USD 22.
“The adjustments, while still adhoc, highlight producer oil price cap of USD 70-75 a barrel and profitability of USD 20-21 per barrel,” it said.
The tax on exports has been raised as cracks or margins rose but the same on domestically produced oil was reduced as international oil prices slid to a six-month low.
India first imposed windfall profit taxes on July 1, joining a growing number of nations that taxes super normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners.
On July 1, export duties of Rs 6 per litre (USD 12 per barrel) were levied on petrol and ATF and a Rs 13 a litre tax on the export of diesel (USD 26 a barrel). A Rs 23,250 per tonne windfall profit tax on domestic crude production (USD 40 per barrel) was also levied.
Thereafter, in the first fortnightly review on July 20, the Rs 6 a litre export duty on petrol was scrapped, and the tax on the export of diesel and jet fuel (ATF) was cut by Rs 2 per litre each to Rs 11 and Rs 4, respect ..