From January 16, 2022, the Federal Board of Revenue (FBR) has removed or lowered the sales tax on all petroleum products. From that date forward, the sales tax on light diesel oil has been repealed.
SRO.183(i)/2022 was issued by the FBR on Thursday to amend S.R.O. 57(I)/2016. The general sales tax (GST) on petrol has been decreased from 2.50 percent to 0.79 percent, a reduction of 1.71 percent, according to the notification.
The sales tax on high-speed diesel oil has been lowered from 5.44 percent to 3.17 percent, a 2.27 percent reduction. Similarly, the Kerosene sales tax has been reduced by three percent, from 8.30 percent to 5.30 percent.
With effect from February 1, 2022, the federal government has also cut the petroleum levy rate to accommodate the increase in international oil prices.
Notably, the international market for petroleum products has peaked at $90 per barrel, the highest level since 2014, with a 14.5 percent increase in January over December.
According to an official of the tax apparatus who spoke on the condition of anonymity, the expected revenue loss due to zero sales tax on petroleum goods will be between Rs. 21 billion and Rs. 25 billion in a month based on current consumption levels.
According to the Finance Division, the present GST rate and petroleum levy on various petroleum goods were considerably below planned targets, and the government was facing a revenue loss of roughly Rs. 30 billion (fortnightly) due to the current petroleum levy and sales tax rates.
In addition, the petroleum levy on petroleum goods has been changed. Petrol has had its levy lowered from Rs. 17.62 per liter to Rs. 13.92 per liter, HSD [high speed diesel] from Rs. 17.14 to Rs. 9.30 per liter, SKO [superior kerosene oil] from Rs. 5.91 to Rs. 1 per liter, and LDO [light diesel oil] from Rs. 7.66 to Rs. 5.50 per liter.
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