What is a windfall tax?

• Windfall taxes are designed to tax the profits a company derives from an external, sometimes unprecedented event— for instance, the energy price-rise as a result of the Russia-Ukraine conflict.
• These are profits that cannot be attributed to something the firm actively did, like an investment strategy or an expansion of business. 
• Governments typically levy a one-off tax retrospectively over and above the normal rates of tax on such profits, called windfall tax. 
• One area where such taxes have routinely been discussed is oil markets, where price fluctuation leads to volatile or erratic profits for the industry.

Why in News?

• The government has increased the windfall profit tax on crude oil produced in the country.

https://business.outlookindia.com/news/government-hikes-windfall-profit-tax-on-crude-oil-cuts-levy-on-diesel-exports