ISLAMABAD: The Federal Board of Revenue (FBR) has announced sharp cut in sales tax on supply of petroleum products.
The FBR on Thursday issued SRO 183(I)/2022 to reduce the sales tax against normal rate of 17 per cent.
The revenue body previously issued SRO 88(I)/2022 dated January 18, 2022 to change the sales tax rates.
According to the SRO 183(I)/2022, the sales tax rate on light diesel oil has been slashed to zero percent from previous 2.7 per cent.
The sales tax rate on petrol has been reduced to 0.79 per cent from 2.5 per cent. Similarly, the sales tax on high speed diesel has been reduced to 3.17 per cent from 5.44 per cent.
The sales tax rate on kerosene oil has been slashed to 5.30 per cent from 8.30 per cent.
The federal government had deferred the increase in prices of petroleum products for next fortnight starting February 01, 2022. A statement issued by the Finance Division stated that the petroleum products were showing substantial increase in the international market and presently trading at highest level since 2014.
The oil prices have witnessed an increase of 14.5 per cent just in January 2022 in the global market. The existing sales tax rate and Petroleum Levy on various petroleum products are much below the budgeted targets.
The government is bearing the revenue loss of around Rs30 billion (fortnightly) on account of budgeted to existing petroleum levy and sales tax rates and Rs 260 billion annually due to reduced sales tax rate.
Despite revenue losses due to rising petroleum prices globally, the Prime Minister of Pakistan has deferred the proposal by OGRA to increase up to Rs. 16.79/Litre in the petroleum product prices and desired that petroleum product prices shall remain the same from 1st February, 2022 as notified earlier on January 15, 2022 for providing maximum relief to the general public.