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Sales Tax Reduction on Petroleum Products by FBR
Petrol Price in Pakistan

Sales Tax Rate on Petroleum Products Further Reduced by FBR

Federal Board of Revenue (FBR) on Tuesday slashed sales tax rates on petrol and high speed diesel (HSD) in order to reduce the impact of high oil prices at consumer end.

The FBR issued SRO 88(I)/2022 dated January 18, 2022 to notify changes the sales tax rates on supply of petroleum products.

The sales tax on supply of petrol has been reduced to 2.5 per cent ad valorem from 4.77 per cent. Similarly, the rate of sales tax on supply of high speed diesel has been reduced to 5.44 per cent from 9.08 per cent.

The FBR kept unchanged the sales tax rates on kerosene and light diesel oil at 8.30 per cent and 2.70 per cent, respectively.

The revenue body previously issued SRO 01(I)/2022 dated January 3, 2022 to change the rate of sales tax on petroleum products.

Earlier on January 15, 2022, the government announced to increase prices of all petroleum products for next fortnight.

According to the notification, the price of petrol has been increased by Rs3.01 to Rs147.83 per liter from Rs144.82.

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The price of high speed diesel (HSD) has been increased by Rs3 to rs144.62 per liter from Rs141.62.

The rate of kerosene has been enhanced by Rs3 to Rs116.48 per liter from Rs113.48.

The price of light diesel oil has been increased by Rs 3.33 to Rs114.54 per liter from Rs111.21.

According to a notification issued by the Finance Division on January 15, 2022, the decision to enhance domestic prices of petroleum products because the international oil price had registered 6.2 per cent during the last week. Presently, at the highest level since last year.

The existing sales tax rate and petroleum levy on various petroleum products are much below the budgeted targets.

The finance ministry said that against the recommendations of Oil and Gas Regulatory Authority (OGRA) for increase of Rs5.52 per liter in petrol and Rs6.19/liter in high speed diesel prices, the Prime Minister had directed to absorb at the international prices through further cut in sales tax from last fortnight.

“The finance ministry will take Rs2.6 billion revenue hit due to reduced sales tax rates,” it added.

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Therefore, the government has decided to make partial increase in the prices of the petroleum products in order to provide relief to the end consumers.

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