Windfall Tax
Concept and India's Experience
A windfall tax is a one-time or periodic levy imposed on industries that earn unexpectedly high profits due to external events rather than their own enterprise or investment. Governments worldwide have used windfall taxes as a fiscal tool to capture excess profits and redistribute them for public benefit. India first introduced a modern windfall tax on crude oil production and refined fuel exports on July 1, 2022, in the wake of the Russia-Ukraine war that pushed global crude prices above $100 per barrel. The tax is structured as a Special Additional Excise Duty (SAED) on crude oil and as a combination of SAED and Additional Excise Duty (or Road and Infrastructure Cess) on diesel and ATF exports.
- India's windfall tax was reviewed and revised fortnightly by the CBIC based on prevailing international crude oil prices.
- The tax directly affected major exporters of refined petroleum products, primarily Reliance Industries (Jamnagar refinery) and Nayara Energy (Vadinar refinery), both of which have large export-oriented refining capacities.
- India's windfall tax was abolished with effect from December 2, 2024, when international crude prices declined below the threshold justifying the levy — but it has been reintroduced in 2026 due to the energy crisis arising from the Strait of Hormuz blockade.
● Tracked since March 27, 2026 · last seen April 11, 2026 · updates as the daily brief publishes