Islamabad, August 5, 2025 – The Ministry of Finance has announced that the federal government collected a record-breaking Rs1.22 trillion through the petroleum levy during the fiscal year 2024-25, marking a 20% increase compared to Rs1.02 trillion in the previous year.
The petroleum levy is a non-tax revenue tool imposed on the sale of petroleum products, separate from the traditional taxation system. Despite maintaining a sales tax exemption on petroleum to claim relief for the inflation-hit public, the government continued to extract substantial revenue through this levy.
Tax experts noted that the levy remains with the federal government, unlike sales tax revenue, which must be shared with provinces. This fiscal design incentivizes the government to prioritize the petroleum levy over sales tax on fuel products.
While the levy provided significant revenue support to the federal budget, it effectively placed a heavy burden on consumers already facing financial stress. The collection of Rs1.22 trillion from fuel purchases raises questions about the actual relief offered to the public.
Adding to the pressure, the government has introduced a new Climate Support Levy of Rs2.5 per liter on petroleum products from fiscal year 2025-26. Authorities have hinted that this levy will gradually increase in the coming years, further elevating fuel prices and squeezing consumer spending.
With both the petroleum levy and new climate charges in place, fuel remains a critical source of government funding — but at a growing cost to the average citizen.