According to a government notification on Tuesday, the central government has withdrawn all windfall taxes on crude oil with immediate effect.
Windfall tax is levied by governments when an industry unexpectedly earns large profits. The tax was levied in July last year as high energy prices led to soaring profits for oil producers.
The government has cut the windfall tax on crude oil production to zero which was Rs 3500 per tonne earlier.
The windfall tax on diesel has been slashed to Rs 0.5 per litre from Rs 1 per litre earlier. The tax on petroleum and ATF has been removed.
This decision comes when global crude oil prices rose after the group of oil-producing countries decided to cut output come May this year.
Further output cuts of around 1.16 million barrels per day has been announced by the Organization of the Petroleum Exporting countries (OPEC) and oil producers. The Centre imposed a cess of Rs 23,250 per tonne on crude oil after taking into account huge margins being accumulated by the domestic crude producers due to rising global crude prices. After that, the government had been reducing the windfall tax on crude oil from timed to time.