Windfall Tax: Government again reduced windfall tax on crude oil, from Rs 6300 per tonne to Rs 5000 per tonne.

The Government of India has reduced the windfall tax on crude oil from Rs 6,300 per tonne to Rs 5,000 per tonne. The tax rates are reviewed every fortnight based on the average oil prices over the previous two weeks. On November 16, the Center had reduced the windfall tax on crude oil from Rs 9800 per tonne to Rs 6300 per tonne.

What is windfall tax?

The tax imposed by the government on companies making unexpected and above average profits is called windfall tax. When the government sees a sudden increase in the revenue of an industry, it decides to impose windfall tax. By imposing this tax, the government keeps some part of the profit with itself. Windfall tax is temporary. Windfall tax is reviewed every 15 days by the Central Board of Indirect Taxes and Customs. This tax is generally imposed on long established businesses which make huge profits due to some external reason. In simple words, profit is windfall. Therefore, unexpected taxes are imposed on unexpected profits.