Windfall gains tax

A windfall tax is levied not on profit as such but on the portion of profit that arises from circumstances outside the firm's own effort — a war, a supply disruption, a sudden price spike. The logic is that when the international price of crude jumps, a domestic producer that pumps oil at unchanged cost, or a refiner that can export fuel at global prices, earns a gain it did nothing to create. India's version, the Special Additional Excise Duty, has two legs: a levy on domestically produced crude oil and an export duty on petrol, diesel and aviation turbine fuel. It exists because refiners can choose between selling into an administered domestic market and exporting at world prices; taxing the export margin removes part of that incentive and keeps supply at home. The fortnightly revision is the distinctive Indian design feature — rates are reviewed every fifteen days against average international prices, so the tax rises and falls with the very margin it is meant to capture, and can go to zero when the margin disappears. That is exactly what happened to petrol on 15 August 2026.