Petrol costs Rs77.47 a litre in Delhi and diesel Rs68.53.
Congress has taken out protests against the fuel price hike.
However, the sources claimed that the windfall tax may well be accompanied by a minor tinkering with excise duty rates to give immediate relief to consumers. It in 2012 raised the windfall tax threshold to $55 per barrel.
India is not the only country to consider levying a windfall tax on oil producers.
The government is looking at both short-term and long-term solutions to the rocketing fuel prices, Oil Minister Dharmendra Pradhan said on Thursday as state-run oil companies increased rates for the 11th straight day. In 2011, the United Kingdom raised the tax rate to be applied to North Sea oil and gas profits when the price was above $75 per barrel.
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Critics rounded on Pompeo's speech, saying his demands could have been made without pulling America from the nuclear deal. He said the new policy sought to strangle Iran's "economic capacity to do harm to the Middle East and to the world".
Sources said the windfall tax is one of the options being considered by the government as a permanent solution to dealing with the problem of spike in oil prices. Just four states - Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh - and one union territory had heeded the government's call to lower Value-Added Tax in line with its October excise duty cut of Rs 2 per litre of fuel and diesel. In particular, resources have to be arranged for the National Health Protection Scheme (NHPS) that aims to provide health insurance cover of Rs 5 lakh to every eligible household. Prices of diesel and petrol in India have surged to a record high, stoking acerbic criticism from the opposition of Prime Minister Narendra Modi's administration for causing hardship to people.
Since the time the hiatus ended on 14 May, rates have gone up by Rs2.84 a litre in case of petrol and Rs2.60 in diesel. This discount helped the retailers make good a part of the losses they incurred on selling petrol and diesel below cost.
The government is under pressure to soften the impact of rising crude oil prices, which have risen by two-thirds in the past 11months and touched $80 per barrel, leading to a sharp increase in petrol and diesel rates.
Given the spurt in global crude prices, oil producers have made huge profits in recent times.