What is Windfall tax? Windfall tax raised on crude, fuels. Everything you need to know – Zyadapaisa.com
What is Windfall tax?
A windfall tax is a tax that is imposed by the central government to absorb the super profit/Windfall profit, which is earned by industry, due to an unprecedented event ( One example of such an event is the Russia-Ukraine war which has led to an increase in oil prices ). These profits are not restricted to a particular organization only, rather the benefit of such an event is enjoyed by the whole industry. It is revised every fortnight by the central government. The purpose behind imposing windfall tax is to generate revenue for the government which helps them to fight the Fiscal deficit. One question which may arise in your mind is, what is super profit?
Super profit is the profit that is earned by an organization over and above its normal profit ( i.e. the profit that an organization earns if such an event would not have occurred )
Windfall tax raised on crude and fuel
Centre on 2 January 2023 has hiked the windfall tax on domestically produced crude oil, ATF and high speed diesel as per the notification issued by CBDT which will come into force from 3 of January 2023. Earlier the central government has reduced the windfall tax on 16 December 2022.
New rates of windfall tax:
- Tax on domestically produced crude oil has been increased to Rs.2100/- per tonne from Rs.1700/- per tonne.
- Tax on ATF or jet fuel has been increased to Rs.4.5/-per liter from Rs. 1.5 per liter earlier.
- Tax on High-speed diesel for export has been increased to Rs. 7.5/- per liter from Rs. 5/- per liter earlier
- No change has been proposed for the petrol.