Why In the News?

The Indian government on 17th September scraped windfall tax domestically produced crude oil to nil per ton with effect from 18th September. The tax is levied in the form of Special Additional Excise Duty (SAED) and is notified fortnightly based on average oil prices in two weeks. The SAED on the export of diesel, petrol, and jet fuel, or ATF, has been retained at nil.

About Windfall Tax

• It is a type of tax that is levied on companies or individuals who have unexpectedly and/or dramatically gained huge profits, often due to external factors beyond their control.
• It is commonly levied on industries such as oil, gas, and mining.
• The purpose is to capture a portion of the extraordinary profits that companies make and redistribute it for public goods.
• It is a strategic measure to promote transparency and fairness and responsible economic practices in the energy industry.
• It is Indirect Tax in nature.