On Wednesday, Oil and Natural Gas Corporation Ltd (ONGC) shares gained more than 2% in early morning trade after the Government of India scraped all windfall tax on crude oil on April 4, 2023.

Presently, only diesel holds a windfall tax, whereas crude oil, aviation turbine fuel, and petrol are relieved from such taxes.

The windfall tax on crude oil production was scrapped to NIL from Rs 3,500 per ton, per the government notification from April 4. The tax for diesel was cut to Rs 0.50 per litre from Rs 1 beforehand.

At 9.33 am, the ONGC stock traded at Rs 156.10 per share, up 1.6% from the earlier close on the Bombay Stock Exchange.

When worldwide oil prices had mounted to above $100 per barrel, domestic refiners wanted to create gains from solid refining margins in overseas marketplaces besides selling it within the country.

According to the media report, the government imposes a tax on windfall profits from oil manufacturers at any price they get above the beginning of $75 per barrel.

On Monday, ONGC shares mounted after the crude prices climbed more than 5%. Moreover, as the windfall tax is now scrapped on all crude exports, excluding diesel, the company’s shares will probably trade higher in the short term.

According to the analysts’ calculations, every $1-a-barrel rise in crude realisation implies a 2% to 4% upsurge in earnings per share for businesses such as ONGC and Oil India.