The windfall tax on crude oil will be decreased from Rs 12,100 per tonne to Rs 9,050 per tonne, by the Government issued on Tuesday, 17th November 2023.
When the price of a particular product, like crude oil, rises dramatically, a windfall tax is imposed on it. This tax is intended to lower consumer costs for products and services as it motivates businesses to reduce prices in response to strong demand.
The government levies windfall taxes in response to an unexpected increase in an industry's earnings. For instance, the recent conflict between Russia and Ukraine helped the oil and gas businesses by suddenly increasing their profits.
To incentivize oil corporations to reinvest more in the economy, governments have in certain instances raised the windfall tax rate. In other instances, tax rates on oil firms have been lowered by governments in an effort to entice them to make larger social investments.