Short Article

16-12-2024 | 17:06 PM

Windfall Tax

The government abolished the windfall tax on crude oil, ATF, petrol, and diesel exports.

Key Highlights

• A windfall tax is imposed on industries or companies that experience extraordinary profits due to favourable market conditions, not attributable to their efforts or innovation. 
• These taxes help governments capture a share of these gains to fund public projects, manage fiscal deficits, or address wealth disparities. 
• It was introduced in July 2022, when global crude oil prices surged due to geopolitical tensions, including the Russia-Ukraine war. 
• It targeted domestic crude oil producers and exporters of petroleum products (e.g., petrol, diesel, ATF), who benefited from elevated global prices.

Why was it abolished? 

• Stabilising global oil prices: Crude oil prices have come down from their peaks, reducing the need for the tax. 
• Boosting domestic and export sectors: Encourages more investment in oil and gas exploration and production.