Windfall Tax UPSC

Windfall Tax

The Ministry of Finance recently justified the windfall tax levied by the Center on domestic crude oil producers, claiming that it was not a last-minute decision but rather the result of extensive industry engagement.

Image Source - clevernotes

About Windfall tax

It first appeared in 2022.
Windfall taxes are made to tax any income a business makes as a result of an unforeseeable, external event, such as the increase in energy prices brought on by the conflict in Ukraine and Russia.
These are gains that can't be directly linked to something the company actively did, like an investment plan or a corporate development.
A windfall is described as an "unearned, unplanned boost in income via no additional effort or expense" by the Congressional Research Service (CRS) of the United States.
Goals: Implementing the windfall tax in order to control the "phenomenal gains" produced by some oil refiners that choose to export petroleum in order to profit from the explosive growth in global prices while reducing domestic supplies.
Global Scenario: In addition to India, a number of nations, including the UK, Italy, and Germany, have either implemented or are considering implementing a windfall profit tax on energy corporations' above-average profits.

Source: The Hindu

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