Windfall Tax : India Cut Its Windfall Tax On Petroleum Crude
India cut its windfall tax on petroleum crude to 1,700 rupees ($20.53) a tonne from 2,300 rupees a tonne, according to a recent government notification.
- Windfall Tax levied by governments against certain industries when economic conditions allow those industries to experience significantly above-average profits.
- The term “windfall” refers to an unexpected rise in profits, and the tax on windfall gains is known as the windfall tax.
- When the government notices a sudden increase in an industry’s revenue, they impose this tax.
- The most common industries that fall target to windfall gains tax include oil, gas, and mining.
- Purpose:
- Redistribution of unexpected gains when high prices benefit producers at the expense of consumers;
- To fund social welfare schemes;
- As a supplementary revenue stream for the government;
- As a way for the Government to narrow the country’s widening trade deficit.
