Pakistan Approves Petroleum Levy Increase to Rs 70 per Liter

Pakistan Approves Petroleum Levy Increase to Rs 70 per Liter

Karachi, June 29, 2024 – Pakistan has approved an increase in the petroleum levy to Rs 70 per liter on the price of petroleum products for the fiscal year 2024-25.

This decision, made under the Finance Act, 2024, is expected to impact various petroleum products and has been met with considerable attention from both consumers and industry experts.

Commenting on the Finance Act, 2024, tax experts at A. F. Ferguson Chartered Accountants noted that the Finance Bill initially proposed enhancements to the maximum rates of the petroleum levy as specified in the Fifth Schedule to the Petroleum Products (Petroleum Levy) Ordinance, 1961. Additionally, it introduced minimum rates for certain products. However, through the Finance Act, 2024, the proposed minimum rates have been withdrawn, and the maximum rates proposed through the Finance Bill have been adjusted downward.

For the fiscal year 2024-25, the maximum rates of petroleum levy per liter are as follows:

• High-Speed Diesel Oil (HSD): Enhanced from Rs 60 to Rs 70.

• Motor Gasoline (Petrol): Increased from Rs 60 to Rs 70.

• Superior Kerosene Oil (SKO): Maintained at Rs 50.

• Light Diesel Oil (LDO): Maintained at Rs 50.

• High Octane Blending Component (HOBC): Increased from Rs 50 to Rs 70.

• E-10 Gasoline: Maintained at Rs 50.

The increase in the petroleum levy, particularly on high-speed diesel and motor gasoline, which are widely used across the country, is likely to have a ripple effect on transportation costs and, subsequently, on the prices of goods and services.

Tax experts highlight that the decision to enhance the petroleum levy is part of the government’s broader strategy to generate additional revenue and address fiscal challenges. However, the impact on the common man, who is already facing economic pressures, could be significant. The increase in fuel prices typically leads to higher inflation rates, affecting the cost of living and potentially slowing down economic activities.

The government has justified this move by emphasizing the need for greater revenue generation to support infrastructure development and public welfare projects. Despite maintaining certain levies at their current rates, the overall increase is seen as a necessary step to balance the budget and meet financial obligations.

As Pakistan navigates through economic reforms and fiscal adjustments, the implications of such policy changes will be closely monitored by industry stakeholders and the general public. The effectiveness of this levy increase in achieving its intended fiscal goals, while managing the economic burden on the populace, will be a key focus in the coming months.