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News: The government recently removed the windfall tax on domestically produced crude oil and exports of petrol, diesel, and aviation turbine fuel after a decline in international oil prices.
About Windfall tax
- Windfall tax is a tax imposed by governments on companies that have earned unexpectedly high profits due to favorable market conditions, policy shifts, or external factors.
- It is typically imposed on industries like oil, gas, and mining.
- The aim is to seize a portion of the exceptional profits earned by companies and redirect it for the benefit of the public.
- India introduced windfall profit taxes on July 1, 2022 to curb profits made by oil & gas companies during Russia-Ukraine war.
- It is levied in the form of Special Additional Excise Duty (SAED).
- The tax rates are reviewed every two weeks based on the average oil prices from the previous fortnight.
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