Govt considers windfall tax on oil and gas giants

NEW DELHI: India is considering a so-called windfall tax on oil and gas producers (state-owned as well as private) to offset ballooning public expenditure on fuel, food and fertiliser subsidies amid skyrocketing inflation, two people familiar with the development said on condition of anonymity.

The tax, which may be levied when oil prices, for instance, cross a certain level, will boost the government’s finances, and help fund efforts to protect vulnerable sections from rampant inflation.

Windfall tax is, simply, a tax levied on companies whose financials have been boosted purely by luck, or events for which they are not responsible. For instance, energy companies have benefitted from the global spike in energy prices on account of Russia’s invasion of

India is expecting its food, fuel and fertiliser subsidy bills to jump. At the same time, it has reduced excise duty on auto fuels

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ONGC in February this year declared highest-ever 9-month net profit of ₹31,446cr in 2021-22, a 597% y-o-y jump

Ukraine.

The UK, on Thursday, announced a 25% windfall tax on profits of oil and gas companies.

In India, the people cited in the first instance said that domestic oil and gas producers have seen a sharp rise in profits, with some exporting auto fuels even as their local pumps are dry. A final decision on this matter would, however, be taken by the competent authority in an appropriate time, they added.

This is not the first time India is considering a windfall tax. Policymakers flirted with the idea in 2018, and before that in 2008, when oil prices were on a high,