Climate Support Levy introduced under Finance Act 2025 boosts revenue collection during first nine months
The government collected Rs37.28 billion in carbon levy during the first nine months (July–March) of fiscal year 2025-26, according to official data released on Thursday.
The carbon levy, officially named the Climate Support Levy, was introduced through the Finance Act 2025 as part of the government’s efforts to promote a cleaner environment and generate funding linked to climate-related initiatives.
Under the current fiscal year, the government imposed a carbon levy of Rs2.5 per liter on petrol and high-speed diesel. The levy is scheduled to automatically increase to Rs5 per liter in fiscal year 2026-27.
The government has also imposed the Climate Support Levy on furnace oil at Rs2.5 per liter, equivalent to Rs2,665 per metric ton, for fiscal year 2025-26. The rate is also planned to rise to Rs5 per liter in the next fiscal year.
Officials said the levy is aimed at discouraging excessive consumption of fossil fuels while supporting broader environmental and climate policy objectives.
The carbon levy is being collected separately from the petroleum levy, which the government continues to impose at varying rates on petroleum products to support revenue generation.
Economists said higher fuel-related taxation may help strengthen government revenues, although it could also add pressure on transportation and energy costs in the coming months.