New Delhi, May 1 (IANS) The Government has cut the windfall tax on crude oil to Rs 8,400 a metric ton from Rs 9,600 with effect from Wednesday as part of its fortnightly revision.

Upstream oil exploration and production companies ONGC and Oil India Ltd stand to gain as they will have to pay a lower tax on their crude.

The reduction in the windfall tax has been announced in view of the decline in crude oil prices in the market which means the upstream oil companies are not making as much money as they were earlier.

The government had on April 16 raised the windfall tax on petroleum crude to Rs 9,600 a metric ton from Rs 6,800 due to the sharp increase in oil prices at the time.

The windfall tax on crude was introduced in July last year as a sudden spike in prices had increased the earnings of the oil companies and the government wanted to tap part of this gain to reduce the fiscal deficit.

The windfall tax was extended to exports of petrol, diesel and aviation fuel after private refineries started raking in big gains from overseas markets, instead of selling the fuels in the domestic market.

The government has left the windfall tax on these fuels unchanged in the current round.