ISLAMABAD: The government on Tuesday granted sales tax holiday on supply of all petroleum products to bring down the impact of high prices.
In order to implement sales tax exemption on all the petroleum products, the Federal Board of Revenue (FBR) issued SRO 321(I)/2022.
As per the SRO the sales tax has brought to zero per cent on petroleum products, including petrol, high speed diesel, kerosene and light diesel oil.
The FBR previously issued SRO 183(I)/2022 on February 10, 2022 to notify reduction the sales tax rates on petroleum products. According to this notification, the light diesel oil was cut to zero per cent sales tax. The sales tax rates on other petroleum products were: 0.79 per cent on petrol; 3.17 per cent on high speed diesel; and 5.3 per cent on kerosene.
A day earlier, Prime Minister Imran Khan announced major relief by reducing prices of petroleum products and cut in electricity tariff. The prime minister also announced to keep the prices unchanged till upcoming budget. The prices of petrol and diesel have been slashed by Rs10 per liter on both the products.
The latest move to bring the sales tax at zero per cent on supply of petroleum products is also connected to the announcement. By reducing the sales tax the government has absorbed impact of high oil prices and prevent passing the high prices to the masses.
A statement issued by the Finance Division a day earlier stated that the global prices of petroleum products are tracking the Ukraine-Russia war and resultantly surged to $100 per barrel. “The unprecedented increase is very risky for the domestic fuel prices and inflation,” it added.
The situation leaves very few options for the government, it said, adding that prior to review on February 28, 2022, the government had left more than Rs70 billion per month to keep the prices lower and providing relief to the masses.