ISLAMABAD: The federal government has proposed to raise the rate of GST on import of crude oil by 17 percent in a bid to accelerate the exploration activities to maximise indigenous production of crude oil and natural gas.
In federal budget 2021-22, the government has proposed to levy 17 percent GST on crude oil by withdrawing zero rating.
This levy will help fetch Rs38 billion for the government. A crude oil importer told Business Recorder that the sales tax has been imposed on import of crude oil, so that oil marketing companies (OMCs) would timely lift crude oil from local refineries.
The damage may be caused by not lifting crude oil from local fields, and this could affect the supply of other products of gas and LPG that are extracted from these wells as well, an official of the Petroleum Division said.
The imposition of tax will also attract foreign investment with the objective to accelerate the exploration activities to maximise indigenous production of oil and gas. The OMCs import petroleum products in big quantities and unable to lift much oil from local refineries.
Last year, stocks were building up at the refineries, which led to the closure of refining plants due to lower consumption of oil and high import of crude oil during the Covid-19.
Under the head of petroleum group, the import bill of crude oil was down by $166 million during the first nine months (July-March) financial year 2020-21 to $3.31 billion against $3.47 billion of the same period last year.
At present, the government charges 17 percent GST on every litre of petrol, high-speed diesel (HSD), which is a major source of revenue in the petroleum group.
All Pakistan Petroleum Retailers Association's head Ghiyas Abdullah Paracha told Business Recorder that it might not have inflationary impact as the government had proposed the imposition of tax on import of crude oil by adjusting other taxes on petroleum products.
Copyright Business Recorder, 2021
Comments
Comments are closed.