Windfall Tax

 

Windfall Tax

Why In News:

●       Centre Slashes Windfall Tax on Domestically Produced Crude Oil: Relief for energy producers.

What is windfall tax?





 

●       A windfall tax is a tax levied on companies or individuals who experience unexpected and large profits, often due to external factors. Here's some information about windfall taxes that might be useful for UPSC exam preparation:

 Purpose

●       Windfall taxes are a tool for governments to redistribute excess profits to society, especially during times of economic volatility.

 How it works

●       Windfall taxes are levied on companies that have benefited the most from economic windfalls, such as commodity-based businesses.

 Examples

●       In India, the government has imposed windfall taxes on domestically produced crude oil.

 Controversy

●       Windfall taxes are controversial, but they can help ensure that businesses' profits don't lead to societal imbalances.

 Other taxes that can be considered windfall taxes

●       Inheritance tax, and taxes on lottery or game-show winnings can also be considered windfall taxes

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