The federal administration is reportedly considering imposing a General Sales Tax (GST) on petroleum or increasing the current rate of charge, to comply with the International Monetary Fund’s (IMF) demand that the 18% GST be reinstated. The budget for the upcoming fiscal year includes a planned increase in the gas tax from Rs. 60 to Rs. 100 per liter. Currently, petroleum and diesel are subject to a levy of Rs. 60 per liter, which generates an estimated Rs. 950 billion in income annually. Since March 2022, the GST on fuel goods has been at 0%. The planned GST rate in the budget was 18%.
The IMF has demanded that the GST standard rate be reinstated, according to sources. The government has announced that it will maintain fuel prices while reducing high-speed diesel by Rs. 1.77 per liter. The price of petrol will remain unchanged at Rs. 279.75 per liter. However, the cost of high-speed diesel has dropped to Rs. 285.56 per liter from Rs. 1.77 paise per liter previously.
This move, intended to stabilize domestic fuel costs, comes amid volatility in the global oil price. The Ministry of Finance regularly reviews petroleum product pricing, considering the impact on consumers and the economy, to bring them in line with global market trends. According to sources from the Ministry of Finance, there has also been a decrease in the price of light diesel oil of Rs. 2.12 per liter and kerosene of Rs. 1.35 per liter, although these changes are not specifically mentioned in the notification.
