Relief to masses: Sales tax on petrol reduced to 10.77%
KARACHI: The Tax authorities, in a move to give relief to the masses, on Monday notified a significant reduction in the sales tax rate on petrol to 10.77 per cent.
The Federal Board of Revenue (FBR) issued an SRO 937 (I)/2021 to reduce the sales tax rate on petrol to 10.77 per cent ad valorem from 16.40 per cent.
Sources in the revenue board said the government had reduced the sales tax rate on petroleum products to absorb the price hike.
The government on July 15, 2021 had announced an increase of Rs5.4/litre to Rs118.09 in the petrol price from Rs112.69. Likewise, the prices of high-speed diesel were increased Rs2.54/litre from Rs113.99/litre to Rs116.53; kerosene, Rs1.39/litre from Rs85.75 to Rs87.14; while the price of light diesel oil was raised Rs1.27 from Rs83.40/litre to Rs84.67/litre.
A minister, while defending the hike in POL prices, said the government had been reducing the tax rate on fuel.
Minister for Information and Broadcasting Fawad Hussain Chaudhry in a statement on July 17, 2021 had said that in January this year, the international Brent crude prices was $51/barrel, whereas in July, it had touched $75-mark, which was an increase of 47 per cent.
In January, the petrol price in Pakistan was Rs106/litre and in July it is being sold at Rs118/litre, which is only 11.3 per cent increase.
If the petroleum levy was kept at the December 2020 level of Rs30, which was the maximum the government can charge, the additional collection would have been approximately Rs200 billion.
For July, the minister had said approximately Rs27 billion would have been collected, if the government had kept sales tax at 17 per cent and the levy at Rs15 as per the IMF programme (pre-Covid level).
Fawad Chaudhry said that the average tax on per litre petrol during the last six months of the PML-N government was Rs22.50, compared with the existing Rs11.50 only.
The sales tax rate on other petroleum products have been kept unchanged as per the notification issued on July 6, 2021.
The sales tax rates on petroleum products are high-speed diesel, 17 per cent; kerosene, 6.7 per cent; and light diesel oil, 0.2 per cent.
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