The Federal Board of Revenue (FBR) on Thursday announced a massive cut in the sales tax rates on all petroleum products to lower the consumer price at retail outlets.
The FBR issued SRO 183 (I)/2022 to make changes in the sales tax rates on the supply of petroleum products. Previously, the FBR issued SRO 88 (I)/2022 dated January 18, 2022 to amend the sales tax rates.
According to the latest notification, the sales tax rate on light diesel oil has been brought to zero per cent from the existing 2.7 per cent.
The sales tax rate on petrol has been reduced to 0.79 per cent from 2.5 per cent. Similarly, the sales tax on high-speed diesel has been reduced to 3.17 per cent from 5.44 per cent. Likewise, the sales tax rate on kerosene has been slashed to 5.30 per cent from 8.30 per cent.
The federal government had deferred the increase in prices of petroleum products for the next fortnight, starting February 1, 2022.
A statement issued by the Finance Division said that the petroleum products were showing substantial increase in the international market and presently trading at the highest level since 2014.
The oil prices have witnessed an increase of 14.5 per cent just in January 2022 in the global market. The existing sales tax rate and the petroleum levy on various products are much below the budgeted targets.
The government is bearing the revenue loss of around Rs30 billion (fortnightly) on account of budgeted to existing petroleum levy and sales tax rates and Rs260 billion annually due to reduced sales tax rate.
Despite revenue losses due to rising petroleum prices globally, the prime minister has deferred the proposal of the Oil and Gas Regulatory Authority (Ogra) to increase up to Rs16.79/litre in the petroleum product prices and desired that the petroleum products prices would remain the same from February 1, 2022 as notified earlier on January 15, 2022 for providing maximum relief to the general public.