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 Indian government has cut the windfall tax on petroleum crude to Rs 5,200 per metric tonne from Rs 5,700.
• The tax, which is revised every fortnight, remains unchanged at zero for diesel and aviation turbine fuel.

https://www.business-standard.com/economy/news/govt-cuts-windfall-tax-on-petroleum-crude-to-rs-5-200-per-mt-from-rs-5-700-124051501591_1.html