The government collected custom duty of Rs 3.159 billion from high speed diesel (HSD) during the first quarter (July-September) of the current fiscal year, showing highest collection of import duty from the POL product during this period, official documents reveal. A copy of official document available with Business Recorder revealed that collection of Rs 3.159 billion custom duty from HSD was followed by Rs 2.896 billion custom duty from furnace oil and Rs 1.114 billion collection of custom duty from motor spirit.
According to official documents, during the period from 30.06.2013 to 31.12.2014, the rate of sales tax on all petroleum products was standard 17 percent ad valorem. Starting 1st January 2015, sales tax rates on 5 regulated products ie Motor Spirit, HOBC, Kerosene, High speed Diesel and Light Diesel Oil were changed on monthly basis to partly compensate for the short-fall in revenue due to reduction in petroleum prices.
The official documents reveal that sale tax on motor spirit, HOBC, Kerosene Oil Light Density Oil was increased from 17 percent to 22 percent in January 2015, and 27 percent in February 2015 when the oil prices were on decline. The government in the subsequent month, sales tax on motor spirit HOBC and Kerosene and LDO was decreased to 18 percent but the on diesel it was increased from 27 percent to 37 percent. Sales tax on diesel in the month of April 2015 was reduced to 32 percent and was again increased to 34 percent in May 2015. The collection of sales tax on diesel was 50 percent in the month October 2015 with official maintained on condition of anonymity that all this was done to make up revenue loss suffered due to decline in petroleum prices in the international market.
The rate of sales tax on furnace oil was enhanced from 17% to 20% with effect from 01.10.2015 and remains the same to date. The rate of sales tax on all other petroleum products has remained at 17% to date. The petroleum products are classified under PCT code 2710 and are subject to various rates of customs duty on ad valorem basis. The rates of customs duty are based on the cascading principle and are adjusted annually if so needed as per government's considered policy.
However, due to tariff rationalisation and elimination of 0% slab from Pakistan Customs Tariff, some of the petroleum products on which customs duty was leviable @ 0% in 2012-13 were subsequently subjected to 1%, 2%, 3% duty over past 3 years. But many important petroleum products ie Aviation spirit, spirit type jet fuel, kerosene, light diesel oil, spin finish oil are still importable @ 0% duty under 5th Schedule to the Customs Act, 1969.
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