FBR reveals Tax Expenditure Report: POL consumers paying levy in lieu of sales tax
The FBR confirmed that consumers pay a petroleum levy instead of sales tax on POL products, as sales tax is exempted when the levy is applied, according to its Tax Expenditure Report.
- FBR's Tax Expenditure Report-2026 findings.
- Major sectors benefiting from sales tax exemptions.
- Annual revenue loss from income tax exemptions.
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
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