ISLAMABAD: The federal government has raised the prices of petroleum products by up to six percent by making adjustment in petroleum levy (PL) and general sales tax (GST) with effect from November 5, 2021.
The PL rate was increased on petrol, and high speed diesel (HSD), however, the government reduced GST until further order.
On the basis of tax rates, import parity price and exchange rate, the government increased the price of petrol and HSD by Rs8.03 and Rs8.14 per litre, respectively.
The prices of kerosene oil (SKO) and light diesel oil (LDO) were increased by Rs6.27 and Rs5.72 per litre, respectively.
Petroleum levy on petrol was increased on petrol and the HSD at Rs4 per litre or 71 and 77 percent increase respectively.
The PL on petrol was increased from Rs5.62 per litre to Rs9.62 per litre.
The rate of PL on HSD was also increased from Rs5.14 per litre to Rs9.14 per litre.
The PL rate on SKO was kept at Rs.06 per litre, same at the rate of second half of October and zero rate on LDO.
The Federal Board of Revenue (FBR) has moved a summary to the cabinet on the reduction in the sales tax rates on the POL products.
The rate of GST on petrol has been proposed to be reduced from 6.84 percent to 1.43 percent or 5.41 percent reduction and on HSD, the rate would be reduced to 3.53 percent or from 10.32 percent to 6.79 percent.
Following approval of the cabinet through circulation, the FBR will issue the notification with effect from November 5, sources said.
The rate of sales tax on petrol and HSD are revised downward with effect from November 2021.
The GST on petrol was decreased from Rs8.82 to Rs2.06 per litre and the rate was reduced on HSD from Rs12.58 to Rs9.02 per litre.
The rate on GST at SKO was, however, increased from Rs6.92 to Rs7.32 per litre.
New ex-depot price of petrol was fixed at Rs145.82 per litre instead of Rs137.79, showing an increase of 5.8 percent.
The product is mostly used in private transport, rickshaws, and motorcycles.
The ex-depot price of HSD was fixed at Rs142.62 per litre instead of Rs134.48 or six percent increase.
The ex-depot price of SKO was set at Rs116.53 per litre instead of Rs110.26 or 5.6 percent increase and the rate of LDO was increased to Rs114.07 per litre from Rs108.26, showing an increase of 5.2 percent.
In a late night statement, the Finance Division says, "On November 1, 2021, the prime minister had not agreed with the proposals worked out by the Ogra and the Finance Division and directed to maintain the prices as notified on October 16, 2021. It is pertinent to mention that maintaining the 16 October 2021 petroleum prices had some underlying concerns for e.g. cash flow issues due to the short recovery of the cost".
The previous petroleum prices, the Finance Division says, already a significant relief was provided to the consumers.
This has dented the PL budget of Rs152.5 billion during July-September 2021 as compared to Rs20 billion realised only.
The PL collection is far short of its fixed target for the first quarter of the financial year 2021-22.
Foregoing in view, prices of petroleum prices have been increased partially as compared to the prices being worked out by Ogra. If the government had accepted OGRA's recommendation, the new prices would have been much higher. In fact, the government has absorbed the bulk of the pressure after making adjustments in the GST and PL.
The oil and gas regulator had proposed to increase the price of petrol by Rs11.53 per litre, HSD by Rs8.49 per litre, SKO by Rs6.29 per litre and LDO by Rs5.72 per litre from November 1 in view of the rising prices of petroleum in the global market.
Copyright Business Recorder, 2021