Context:

The Government has hiked the windfall profit tax on crude oil produced in the country and on export of diesel.

More on News:

• The tax, levied in the form of special additional excise duty, on domestically produced crude oil has been raised to ₹7,100 per tonne from ₹4,250 per tonne.
• Besides, the special additional excise duty (SAED) on the export of diesel has been increased to ₹5.50 per litre from ₹1 per litre. A duty of ₹2 per litre will be imposed on the export of jet fuel.

About Windfall Tax:

• A windfall tax is a higher tax levied by the government on specific industries when they experience unexpected and above-average profits.
  • For Example: Windfall tax was levied on the oil companies of the United States in the 1980s. There was a sudden rise in oil prices due to the crisis of oil in 1979, leading to windfall gain for the companies in the sector later on.
• Purpose: To redistribute excess profits in one area to raise funds for the greater social good.
• Introduction  of Windfall Tax in India: To address the shortage of energy products on the domestic market, the Indian government added a special additional excise duty on the export of gasoline and diesel, known as the Windfall Tax, on July 1st, 2022.

News Source: The Hindu