Oil companies in focus after centre slashes windfall gains tax on crude on Wednesday

Oil stock will gain focus in Thursday's session (August 1) as the Centre has taken a call on the windfall taxes and has on Wednesday reduced the windfall tax on domestically produced crude oil to Rs 4,600 per tonne from Rs 7,000 per tonne.

The new rates become effective on August 1, an official notification said. Last, the government increased the windfall tax to Rs 7,000 from the earlier Rs 6,000. These taxes are being levied since July 2022 as India joined the list of nations that charge tax on the profits of energy companies.
 
The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
 
The reduced windfall tax augurs well for upstream oil companies in India such as ONGC, Oil India and Reliance Industries as it boosts their profitability.

Furthermore, slashed crude oil prices also provide a relief to oil marketing companies in India. At the last count, Brent crude traded at $80.72 per barrel, while WTI Crude was hovering near $78 per barrel levels.

Earlier after Indian Oil Corporation and HPCL came up with weak Q1 results, Zee Business Editor Anil Singhvi said that these companies are available at cheap valuations and he remained bullish on the counters.