The government has hiked the windfall tax on domestically produced crude oil by more than a third while the rate on the export of diesel has been doubled, following which investors on Dalal Street turned cautious on oil and gas stocks on Monday.

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The tax on crude oil producers like state-owned Oil and Natural Gas Corporation (ONGC), Oil India, and Reliance Industries has been increased to Rs 11,000 per tonne beginning October 16 from Rs 8,000.

Also, the government doubled the rate on the export of diesel to Rs 12 per litre from Rs 5 a litre in the fortnightly revision of the windfall tax. The levy on diesel includes Rs 1.50 per litre road infrastructure cess (RIC).

Following the notification on Saturday, shares of Reliance, ONGC, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited declined more than a percent in early deals.

The downtrend comes as the latest increase in windfall tax or Special Additional Excise Duty (SAED) reverses the reduction in two previous rounds in September. This follows the rise in international oil prices. The basket had averaged $116.01 in June, which was used as a base to introduce the levy from July 1.

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The government has also re-introduced the levy on overseas shipment of jet fuel (ATF) in line with the rise in international oil prices. The levy on jet fuel, which was brought down to nil at the beginning of this month, was re-introduced at Rs 3.50 a litre.

Following the increase in ATF levy, here' how stocks of airlines fared:

It must be noted that while the windfall profit tax is calculated by taking away any price that producers are getting above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily the difference between international oil price realised and the cost.

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