Windfall Tax

Category: Economy / Taxation / Energy

UPSC Notes & Key Pointers

  • A windfall tax is a tax imposed on unusually high or unexpected profits earned by businesses due to exceptional market conditions.

  • In India, the term has been particularly associated with special additional excise duty on petroleum products during periods of high global energy prices.

  • It can allow governments to capture part of extraordinary gains.

  • It may also affect producer incentives and investment decisions.

  • Prelims Focus: Meaning, petroleum sector and exceptional profits.