Petroleum levy collection surges to Rs1.6tr in FY26

The government’s Petroleum Levy (PL) collection surged to Rs1.567 trillion during fiscal year 2025-26, surpassing even the upward-revised target of Rs1.498 trillion by around Rs69 billion.

The fiscal operations data released by the Finance Division noted that the collection was also significantly higher than the original target of Rs1.468 trillion, exceeding it by approximately Rs99 billion, reflecting the growing reliance on petroleum levy as a major revenue source.

For the current fiscal year 2026-27, the government has set an ambitious Petroleum Levy collection target of Rs1.676 trillion, which is around Rs109 billion higher than the actual collection recorded in the previous fiscal year.

The latest figures indicate that the government has continued to lean heavily on petroleum products to shore up its fiscal position, with consumers bearing the burden through levies imposed on petroleum products.

PL is a key component of the government’s non-tax revenue and is collected on petroleum products including petrol and high-speed diesel. The levy has increasingly become an important instrument for generating additional revenues while meeting fiscal targets.

The government’s decision to set a higher PL target for FY2026-27 comes despite persistent concerns over the impact of petroleum prices and taxation on consumers, transport costs and inflation.

The Rs1.676 trillion target for the current fiscal year translates into an increase of around 7 percent over the actual PL collection of Rs1.567 trillion in FY2025-26.

The substantial overachievement against both the original and revised targets underscores the importance of Petroleum Levy in the government’s revenue strategy. However, higher collections also raise concerns over the cost burden on consumers and businesses, particularly at a time when energy and transportation costs remain a major driver of inflation.

The government will now have to collect an additional Rs109 billion in PL during FY2026-27 to meet its new target, maintaining pressure on petroleum taxation as a source of fiscal revenue.