ISLAMABAD: The federal government has kept the rates of Petroleum Levy (PL) unchanged, however, reduced general sales tax (GST) on petroleum products with effect from October 1.
On Saturday, the Finance Division issued a statement to counter the criticism for significant increase in the price of petroleum products.
The government has kept PL’s rate on petrol at Rs 5.62 per litre. The rate of PL on High Speed Diesel (HSD) is kept at Rs 5.14 per litre. The PL being charged on Kerosene Oil (SKO) is Rs 2.06 per litre and there is no PL is on Light Diesel Oil (LDO).
An official of the Federal Board of Revenue (FBR) on the condition of anonymity told Business Recorder that reduction in rates of GST on petroleum products also has a negative impact on revenue collection.
He said the government has to face an estimated Rs 5 to 6 billion revenue shortage due to reduction in two petroleum products.
The government notified GST that is reduced to 6.84 percent from 10.54 percent on petrol, on HSD, the rates are revised downward to 10.32 percent from 11.64 percent, while the GST rates on SKO are kept unchanged at 6.70 percent and 0.20 percent on LDO.
POL products’ prices increased
In a clarification, the Finance Division stated Oil and Gas Regulatory Authority (OGRA) had proposed significant increase in the prices of petroleum products to be effected from October 1, however, the Prime Minister did not agree with the recommendations of OGRA and approved much less increase in the prices of petroleum products.
Prices of petrol were proposed to be increased by Rs 8.41 per litre but Prime Minister had approved increase of only Rs 4 per litre while in HSD the proposed increase by OGRA was Rs 3.46 per litre while government approved increase of only Rs 2 per litre.
The regulator also suggested increasing SKO price by Rs 7.05 per litre which the government agreed. This petroleum product is highly subsidised and used in defence. However, the low consumption LDO's proposed price increase was Rs 10.33 per litre while the Finance Division allowed Rs 8.82 per litre.
“This was done by keeping the PL constant while reducing the rate of GST, thus government absorbed the increase in international petroleum prices by reducing the GST," the statement says.
It further clarified that despite increasing international prices, government had taken the hit and did not increase the petroleum prices in commensurate with the increase in international prices.
Copyright Business Recorder, 2021
Comments
Comments are closed.