The issue of raising the petroleum tax rate on liquefied petroleum gas divides the federal administration (LPG).
According to sources, the Economic Coordination Committee (ECC) of the cabinet postponed discussion of the summary of the petroleum division’s rate of petroleum levy (PL) on LPG at its most recent meeting.
While Finance and Law Division requested an increase in the rate of PL from the current Rs 4.669/MT to Rs 10,111/MT taking into account the entire expected local production of LPG as being 791.205 MT during 2022–2023, Planning Division proposed maintaining the present cost of PL to avoid inflation.
However, OGRA believed that both locally produced and imported LPG should be subject to the same PI and other taxes.
According to sources, the annual budget statement for 2022–23 reveals that the Finance Division has recommended Rs 8 billion in revenue collection objectives for the Petroleum Levy on LPG for the next fiscal year.
It should be mentioned that the Petroleum Division recommended maintaining the current PI rate of Rs 4.669/MT with a revenue target of Rs 3.694 billion while presenting the Budget proposal for FY 2022–23. However, without disclosing the PL rate, the Finance Division lowered the aim to Rs 8.00 billion against the Petroleum Levy on LPG.
When taking into account the entire expected domestic production of LPG as 791.205 MT during 2022–2023, the PL rate is computed as Rs 10,111/MT in order to meet this income objective of Rs 8 billion.
It should be noted that the Petroleum Products (Petroleum Levy) Ordinance, 1961, and Petroleum Products (Petroleum Levy) Rules, 1967, both stipulate in sub-section I of Section 3 that corporations, refineries, and licensees must pay the Petroleum Levy at the rate announced by the federal government.
In light of the aforementioned situation, the petroleum division has requested approval of a PL rate of Rs10,111 per MT for the sale of domestic LPG in order to meet an expected income objective of Rs8 billion for 2022–2023.
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