FBR reveals Tax Expenditure Report: POL consumers paying levy in lieu of sales tax

ISLAMABAD: The Federal Board of Revenue (FBR) has endorsed that the consumers of petroleum products (POL) are paying petroleum levy in lieu of sales tax due to sales tax exemption available to POL products.

The Federal Board of Revenue’s Tax Expenditure Report-2026 revealed that the Sales Tax Expenditure included sales tax exemption on POL products on which Petroleum Development Levy (PDL) is being charged. In presence of PDL, Sales Tax is not levied as consumers are, in any case, paying PDL. After excluding the PDL from the sales tax expenditures, the cost of sales tax exemption is calculated from other categories.

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The total Sales Tax expenditure after adjusting for the PDL part amounted to Rs 1,273.98 billion for 2024-25, the report said.

Major beneficiaries of Sales Tax Expenditure are: Health/medical; fertilizer/agriculture; food; manufacturing; energy; stationery and Gwadar/EPZ.

Eleven major sectors caused annual revenue loss of Rs 580 billion on account of income tax exemption, according to the Tax Expenditure Report-2026.

Major beneficiary sectors income tax expenditure: social security sector; pension sector; energy & mining sector; financial sector; health / pharma sector; education sector; tribal sector and donations/charities, the report added.

Copyright Business Recorder, 2026