Daily News Analysis

Windfall tax – Petroleum

stylish_lining

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

It is a 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 is it imposed?

    • When the government notices a sudden increase in an industry's revenue, they impose this tax.
    • However, these revenues cannot be linked to anything the company actively pursues, such as its business strategy or expansion.
    • Rather, it is related to a one-off external event for which the business is not responsible. 
    • Consequently, a Windfall Tax is imposed on an industry's profits when it experiences a sharp increase in revenue due to unrelated external events.
    • A recent example is the sudden rise in the profits of the oil and gas industries due to the Russia-Ukraine conflict. 
    • The unexpected windfalls are taxed by the government over and above the normal tax rates.

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.

Global Power Dynamics

India’s aspiration to become a global power is a compelling journey marked by both significant challenges and substantial opportunities. As one of the fastest-growing economies in the world,
Share It

India Electric Mobility Index

The NITI Aayog report “Unlocking a 200 Billion Dollar Opportunity: Electric Vehicles (EVs) in India” and the launch of the India Electric Mobility Index (IEMI) highlight both the poten
Share It

Indian Ports Act, 2025

Why is the Indian Ports Act, 2025 in the News? The President of India has granted assent to the Indian Ports Act, 2025, which replaces the previous Indian Ports Act of 1908. This new Act aims t
Share It

Private Sector in Defense Production

The growth in private sector participation in India's defense production marks a significant shift in the country’s defense strategy and industrial landscape. The private sector share in
Share It

India-Mauritius

The visit of the Prime Minister of Mauritius to Varanasi marked a significant milestone in strengthening the India-Mauritius bilateral ties. Describing India as a trusted partner in Mauritius'
Share It

solar manufacturing ecosystem

India's ambitious plan to develop a fully indigenous solar manufacturing ecosystem by 2028 is an essential step towards achieving energy security, sustainability, and enhancing its position as
Share It

Political Unrest in Nepal

Nepal’s ongoing political unrest, exacerbated by Prime Minister K P Sharma Oli’s resignation and youth-led protests, has created a volatile environment that directly impacts India&rsqu
Share It

Karnataka Platform-Based Gig Workers

Karnataka has recently passed the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2025, aimed at safeguarding the rights and welfare of gig workers. Key Provisions of t
Share It

Income Tax Act 2025

The Income Tax Act, 2025 has received Presidential assent and will replace the Income Tax Act, 1961. The new Act is designed to simplify tax laws, modernize existing provisions, and improve the ef
Share It

Cotton Sector

The Union Government has taken significant steps to support the cotton sector in India, addressing key challenges related to rising imports, farmer welfare, and low domestic production. These meas
Share It

Newsletter Subscription


ACQ IAS
ACQ IAS