Finance Bill 2026 proposes new excise duty on petroleum products including naphtha, white spirit and solvent oil.
ISLAMABAD, June 15, 2026: The government has proposed the imposition of a Rs80 per litre Federal Excise Duty (FED) on selected petroleum products as part of the Finance Bill, 2026, signalling a new taxation measure in the energy and industrial fuel segment.
According to official proposals, the Federal Excise Duty will be applied in sales tax mode on specific petroleum products, including petroleum top naphtha, white spirit (also known as mineral turpentine oil), and solvent oil.
Proposed FED Structure on Petroleum Products
The Finance Bill outlines the following proposed rates:
• Petroleum Top Naphtha (HS Code 2710.1942): Rs80 per litre
• White Spirit / Mineral Turpentine Oil (HS Code 2710.1240): Rs80 per litre
• Solvent Oil (HS Code 2710.1250): Rs80 per litre
Policy Implications for Energy and Industry
The proposed duty is expected to directly impact industrial users of petroleum-based inputs, particularly sectors relying on naphtha and solvent-based products for manufacturing and processing activities.
Market participants say the measure could increase production costs for downstream industries, including petrochemicals, paints, coatings, and related chemical sectors that depend on these inputs.
Revenue Measures Under Finance Bill 2026
The proposal forms part of broader revenue mobilisation efforts under the Finance Bill 2026, as the government seeks to enhance fiscal space amid ongoing economic stabilisation efforts.
Analysts suggest that the introduction of a flat per-litre excise duty reflects the government’s attempt to streamline taxation on petroleum-linked products while improving tax collection efficiency.
Potential Impact on Prices and Supply Chain
Industry experts note that the new FED, if approved, may lead to higher input costs across multiple value chains, potentially feeding into overall production expenses.
However, the final impact on consumer prices will depend on how much of the cost is passed down the supply chain and whether adjustments are absorbed by manufacturers or distributors.
The proposal is currently part of the Finance Bill 2026 and will be subject to parliamentary approval before implementation.
