Why did the Centre hike the windfall tax on domestic crude and cut the levy on export of diesel and ATF

The Centre has recently implemented certain changes in the tax structure related to domestic crude and the export of diesel and aviation turbine fuel (ATF). The decision to hike the windfall tax on domestic crude and cut the levy on the export of diesel and ATF can be attributed to the following reasons:

• To generate higher revenue: The increase in windfall tax on domestic crude aims to boost the government's revenue by taxing excessive profits made by oil exploration and production companies when crude prices rise significantly.
• To promote exports: The reduction in tax on the export of diesel and ATF is intended to encourage the export of petroleum products. This move can enhance foreign exchange earnings and reduce the burden on domestic markets, especially considering the surplus production of diesel and ATF in the country.
• To make domestic production competitive: By reducing the tax on the export of diesel and ATF, the government aims to make domestic production more competitive in the global market. This could potentially lead to increased exports and help in improving the country's balance of trade.
• To support industries: The tax cuts on diesel and ATF exports can benefit industries such as aviation and shipping, which heavily rely on these petroleum products. This can help these industries recover from the adverse impacts of the COVID-19 pandemic and aid in their growth.

Overall, the government's decision to hike the windfall tax on domestic crude while reducing the levy on the export of diesel and ATF aims to strike a balance between revenue generation, promotion of exports, and supporting key industries in the country.