Govt revises sales tax on petroleum products

ISLAMABAD: The federal government has revised the sales tax rates on petroleum products to provide relief to the masses against a sharp rise in the prices of oil in the international market.

According to the statement issued on Saturday, the sales tax rate on petrol has been slashed to 1.43 per cent while the sales tax rate on high-speed diesel has been fixed at 6.75 per cent.

The statement further notified that kerosene and light-diesel will also remain unchanged at 6.70% and 0.20%, respectively.

Earlier this week, the Federal Board of Revenue (FBR) had reduced the sales tax on petrol to a nominal 1.43 per cent effective.

The FBR issued SRO 1450 (I)/2021 for the announced reduction in the sales tax rates on petrol and high-speed diesel. The tax authority reduced the sales tax rates by 73 per cent on petrol, compared with the rates notified on October 7, 2021.

The revenue body also reduced the rate of sales tax on high-speed diesel to 6.75 per cent from 10.32 per cent.

However, the sales tax rates on kerosene and light diesel oil (LDO) have been kept unchanged at 6.70 per cent and 0.20 per cent, respectively.

The revenue body has already imposed a reduced rate of sales tax on petroleum products, as the normal sales tax rate is 17 per cent.

The government on November 4, 2021, notified increased petroleum prices, which are now at an all-time high.

Under the notification, the petrol was fixed at Rs145.82/litre instead of Rs137.79, showing an increase of Rs8.03.

The HSD has been fixed at Rs142.62/litre, compared with Rs134.48, up Rs8.14. The price of kerosene was set at Rs116.53/litre from Rs110.26, up Rs6.27. Likewise, the rate of light diesel oil (LDO) increased to Rs114.07/litre from Rs108.26, showing an increase of Rs5.72.

According to the government authorities, despite the all-time high prices, the government had absorbed the price shocks through a reduction in the sales tax rates.