FBR Reduces Sales Tax on Petroleum Products

The Federal Board of Revenue (FBR) has reduced sales tax from 17 percent to 15.44 percent on Kerosene oil and from 17 percent to 7.56 percent on Light diesel oil from May 1, 2021, to adjust sales tax rates for maintaining prices of the petroleum products unchanged during May.

The FBR has amended S.R.O. 57(I)/2016 (sales tax on petroleum products) through a notification S.R.O. 557 (I)/2021 issued on Monday.

According to the notification, the standard rate of 17 percent would remain applicable on Motor spirit and High-speed diesel oil from May 1.

The federal government had kept the prices of petroleum products unchanged for the first half of May ahead of Eid ul Fitr.


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The cumulative revenue impact of the decision will be Rs. 4.8 billion as the implementation of this proposal requires an adjustment in the rates of petroleum levy (PL) on all petroleum products and a reduction in sales tax as well in the case of kerosene oil (SKO) and light diesel oil (LDO). The government was not charging any PL on SKO and LDO.

The government reduced the rate of PL on petrol to Rs. 6.39 per litre from Rs. 11.23 per litre. The GST on petrol, however, remained unchanged at Rs. 15.77 per litre notified for the second quarter of April.

The government took a downward revision of PL on SKO for the first half of May. The rate of PL on SKO reduced to zero from Rs. 3.51 per litre and GST was also reduced to Rs 10.70 per litre from Rs. 11.62 per litre.

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