Government has raised windfall tax on crude oil to Rs 3200 from Rs 1700 per ton

The government cut windfall tax on petroleum crude from Rs 2300 per ton on January 16. It revises the tax every two weeks. India initially introduced the windfall tax in July 2022 in response to the increasing prices of crude oil. This tax is imposed by governments when an industry unprecedently generates substantial profits.

 A windfall tax is a higher tax levied by the government on specific industries when they experience unexpected and above-average profits. Therefore the tax is levied on companies or businesses by the government to capture revenue from these sudden windfalls and redistribute it to benefit the wider community.

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A windfall tax is imposed on domestically produced crude oil when the rates of the global benchmark exceed $75 per barrel. While, for the export of diesel, aviation turbine fuel [ATF], and petrol, the levy is applicable when the product cracks or margins surpass $20 per barrel.

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