The central government has cut its windfall tax on crude oil and exports of aviation turbine fuel (ATF) and diesel, according to a notification dated January 16.

The move comes just a few days before the Union Budget 2023. As per the notification, the government cut windfall tax on crude to Rs 1,900 per tonne from Rs 2,100, effective from Tuesday.

Windfall tax on crude was cut to 4,350 rupees ($52.60) per tonne from 5,050 rupees per tonne, effective Thursday.

The government also cut export tax on aviation turbine fuel to 1.50 rupees per litre from 6 rupees per litre, and reduced export tax on diesel to 2.50 rupees per litre from 7.50 rupees per litre, the notification said.

India had in July imposed the windfall tax on crude oil producers and levies on exports of gasoline, diesel and aviation fuel after private refiners wanted to make gains from robust refining margins in overseas markets, instead of selling it cheap at home.

The cuts came as Indian refiners continued to stock up discounted Russian fuel amid a steady increase in domestic consumption.

The government had earlier defended its move , explaining that the levy was introduced in view of windfall gains made by domestic crude oil producers and refiners due to high global crude and product prices. However, the government had said that it would review the windfall levy on a fortnightly basis.

The decision to cut windfall taxes further will benefit oil and gas companies as they will be able to increase their margins from overseas exports.