Govt Considering to Increase GST on Petroleum on IMF Demand

The federal government is contemplating measures to meet the International Monetary Fund's demand for the reinstatement of an 18% General Sales Tax (GST) on petroleum products. This includes the possibility of imposing a General Sales Tax (GST) on petroleum or raising the existing levy on it, as per sources familiar with the matter.

Under the proposed plan for the upcoming fiscal year's budget, the levy on petroleum could potentially escalate from Rs60 to Rs100 per liter.

Currently, both petrol and diesel carry a levy of Rs60 per liter, contributing an estimated annual revenue of Rs 950 billion. Notably, since March 2022, petroleum products have been exempt from GST.

The International Monetary Fund's insistence on reinstating the standard GST rate has been underscored by sources.

In recent developments, the government has decided to maintain the price of petrol while reducing high-speed diesel rates by Rs 1.77 per liter.

As per the official announcement, the price of petrol will remain steady at Rs 279.75 per liter. Conversely, the cost of high-speed diesel will see a decrease of Rs 1.77 per liter, settling at Rs 285.56 per liter.

This decision comes against the backdrop of fluctuating global oil prices, aiming to stabilize domestic fuel rates. The Ministry of Finance is vigilant in assessing petroleum product prices to align with international market dynamics, ensuring a balanced approach considering consumer welfare and economic implications.

Though not explicitly outlined in the official notification, insider sources from the Ministry of Finance suggest reductions of Rs. 2.12 per liter for light diesel oil and Rs. 1.35 per liter for kerosene.