Government To Abolish Windfall Tax? What We Know So Far

The Finance Ministry is evaluating the relevance of the windfall tax, which was first imposed in 2022, said a federal government source, as told to Reuters.

What Is India's Take On Windfall Tax?

By the end of August 2024, the windfall tax on domestically produced crude oil was reduced to RS 1,850 Indian rupees per tonne, eventually dropping to zero effective from Sept. 18. The windfall tax on export of diesel and aviation turbine fuel was also eliminated, Reuters reported.

The Finance Ministry is now looking at the collections from windfall tax and studying the crude price trend before taking a call on scrapping the levy, a source from the central government told Reuters.

Tarun Kapoor, adviser to the Indian prime minister, said last month, that the Finance Ministry will evaluate scrapping windfall tax on domestic crude oil output. The official said after a decline in global crude oil prices, there was little justification for maintaining the tax, as reported by Reuters.

What Is Windfall Tax?

Windfall tax is levied on unforeseen or unexpectedly large profit, especially if it is obtained via unfair methods. The windfall tax in India was first imposed in July 2022. In India, the Windfall tax is a special levy on domestic crude oil production, introduced after rising global crude prices, to capture revenue from windfall gains made by producers. In addition to the crude oil levy, the government also imposed special taxes on exports of diesel, petrol, and aviation turbine fuel.