In a move aimed at providing relief to consumers, the Federal Board of Revenue (FBR) has announced a reduction in the sales tax rate on the supply of petrol. The new rate, effective immediately, is set at 10.77%, down from the previous rate of 16.40%.
The FBR officially communicated the reduction through SRO 937 (I)/2021, notifying the adjustment in the sales tax rate specifically for petrol. This decision comes as part of the government’s ongoing efforts to manage the prices of essential commodities and ease the financial burden on consumers.
The reduction in the sales tax rate on petrol follows the federal government’s announcement on July 15, 2021, regarding an increase in the price of petrol by Rs5.4, raising it to Rs118.09 from Rs112.69. Additionally, the prices of high-speed diesel saw an increase of Rs2.54 per liter, going from Rs113.99 to Rs116.53. Kerosene oil witnessed a price hike of Rs1.39 per liter, from Rs85.75 to Rs87.14. The cost of light diesel oil also experienced an upward adjustment of Rs1.27, moving from Rs83.40 per liter to Rs84.67 per liter.
While these price adjustments were implemented in July 2021, the recent decision by the FBR to reduce the sales tax rate specifically for petrol is expected to contribute to lowering the overall cost of this essential fuel. Petrol is a key component of daily transportation for many individuals, and any reduction in its taxation can have a positive impact on the general public.
It’s worth noting that the sales tax rates on other petroleum products, as outlined in the notification issued on July 6, 2021, remain unchanged. High-speed diesel continues to have a sales tax rate of 17%, while kerosene is taxed at 6.7%, and light diesel oil incurs a minimal tax rate of 0.2%.
The reduction in the sales tax rate on petrol is likely to be welcomed by consumers, providing them with some relief amid economic challenges. The move is consistent with the government’s commitment to implementing policies that balance the need for revenue generation with the aim of supporting the public, particularly in terms of essential commodities. The FBR’s decision is anticipated to positively impact consumers and contribute to managing the overall cost of living.
