Windfall Tax Explained: Why ONGC fell 5% when the tax was imposed in UK

Despite crude and gas prices continuing to surge oil major ONGC collapsed more than five percent in trade on Friday. The big question on investors' minds is, will Finance Minister Sitharaman take a cue from the U.K. Finance Minister Rishi Sunak?

So, what is weighing heavy?

The market is speculating that the government could put 'windfall tax' on oil companies in order to offset revenue loss due to recent excise duty cuts.

Britain recently announced a 25 percent windfall tax on oil and gas producers’ profits as crude prices have surged 50 percent so far in 2022.

This has led to Indian investors being worried as they expect a similar move in the country.

What is windfall tax? A windfall tax is a levy imposed on a company or a group of companies by the government, targeting excess and unexpected profits. In the case of oil and gas companies, it is because of the massive gains they have made due to a surge in crude prices.