Petrol, HSD and furnace oil: Rs2.5/litre carbon levy imposed

ISLAMABAD: The federal government has proposed to impose a carbon levy of Rs2.5 per litre on petrol, high-speed diesel (HSD) and furnace oil in the next fiscal year 2025-26. The new tax will be implemented alongside the existing petroleum levy on petroleum products and is expected to generate around Rs46 billion revenue for the government during the fiscal year 2025-26.

It will not apply to kerosene oil and light diesel oil (LDO).

The same levy will be increased to Rs5 per litre to generate Rs95 billion in fiscal year 2026-27, sources said. The funds collected will be allocated towards green budgeting initiatives. The measure comes after the government concluded negotiations with the International Monetary Fund (IMF) for the fiscal year 2026 budget.

Copyright Business Recorder, 2025