Decoded: What is windfall tax on oil companies and where does India stand?

If a windfall tax is imposed in India, it will not only be aimed at private companies like Reliance, but also at state-owned behemoths

Against the backdrop of crude oil prices touching new highs due to Russia’s invasion of Ukraine, there has been a buzz in markets about a one-time “windfall tax” on oil and gas companies. The argument is that since energy companies have profited from high oil prices, a temporary tax can be levied upon them to shore up the government’s finances. Many European nations have already imposed a windfall tax or are considering doing so.

What is windfall tax?

It is essentially a one-time tax imposed on companies or sectors that have seen a jump in their profitability for any number