The Federal Board of Revenue (FBR) will suffer a massive revenue loss of over Rs. 70-75 billion per month in the remaining period of 2021-22 as a result of a Rs. 10 per liter decrease in petrol and high-speed diesel (HSD) prices and a Rs. 5 per unit decrease in electricity rates.
According to sources, the 17 percent sales tax applies to bills issued to both domestic and commercial consumers, while the Prime Minister’s relief is only for domestic consumers.
Currently, the FBR collects nearly Rs. 15 billion in sales tax from electricity each month, covering all sources such as domestic consumers, commercial consumers, and industrial consumers across Pakistan.
The alleviation will have a small negative impact on energy sales tax collection, which is a main sales tax spinner for indirect tax collection from domestic sources.
By lowering petroleum levy (PL) rates on fuel and HSD, the federal government declared that prices of petrol and HSD would be reduced by Rs. 10 per liter with effect from March 1, 2022.
To keep prices low and provide assistance to the poor, the government must suffer a monthly effect of more than Rs. 70 billion. Sales tax and gasoline charge are both included in the Rs. 70 billion figure.
According to a senior Ministry of Finance official, all petroleum goods are subject to a zero percent sales tax.
Reduced prices of POL products will cost the government Rs. 25 billion per month, and sales tax revenue from the POL industry will drop by Rs. 25 billion per month, totaling approximately Rs 200 billion in the final four months of 2021-22.
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