News: The Centre has decided to scrap the windfall tax as the oil prices have subdued.
1. A windfall tax is a tax imposed on companies or industries that have experienced unexpectedly high profits due to factors beyond their control or normal business operations.
2. It is often levied on industries such as oil, gas and mining.
3. The purpose of windfall tax is to ensure fairness and equity by taxing companies that disproportionately benefit from unexpected events.
4. India implemented a windfall tax in 2022 to curb excess profits made by the oil and gas companies during the Russia-Ukraine war.
5. The windfall tax is levied in the form of Special Additional Excise Duty (SAED) and is reviewed every fortnight based on average oil prices in two weeks.
