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Govt increases levy, GST on POL products to meet IMF conditions

Govt increases levy, GST on POL products to meet IMF conditions

ISLAMABAD: The government will charge Rs41.71 per litre on the sale of high speed diesel (HSD) and Rs38.57 per litre on petrol under the heads of custom duty, margin, petroleum levy, and sales tax with effect from December 1, 2021.

The government has increased the petroleum levy (PL) and General Sales Tax (GST) to meet the conditions of the International Monetary Fund (IMF) for the resumption of the stalled loan programme whereas these prices will remain effective until December 15.

According to sources, the government has increased levy on HSD and petrol by Rs4 per litre, while the levy on kerosene oil which was previously at Rs2.62 per litre has been raised to Rs5.91 per litre and the same on Light Diesel Oil (LDO) which was zero until now has been fixed at Rs3.66 per litre.

Total levy on petrol has been increased from Rs9.62 per litre to Rs13.62 per litre while that on HSD has increased from Rs9.14 per litre to Rs13.14 per litre.

Similarly, general sales tax (GST) on petrol has increased from zero to Rs2.34 per litre and from Rs7.37 per litre to Rs9.79 per litre.

Furthermore, Customs duty on petrol and HSD is Rs11.33 per litre and Rs10.45 per litre, respectively and Inland Freight Margin (IFEM) on petrol and HSD is Rs4.440 per litre and Rs 2.06 per litre, respectively.

Dealers margin, which had been an issue leading to protests the past month, is now fixed at Rs3.91 per litre on petrol and Rs3.30 per litre on HSD.

Reportedly, Adviser to the Prime Minister on Finance Shaukat Tarin had said that the IMF had also asked to increase the petroleum development levy (PDL); however, the government’s decision in this regard would depend on the global prices of petroleum products.

“Hinting at an increase in the levy on oil products, Tarin has said that if the global price of oil goes down, it will be easy for the government to increase the PDL,” sources claimed.

Earlier, the PM’s advisor on finance had stated that prices of petroleum products were increased because they were directly linked with the international market, where prices touched peak levels in the last several years.

At present, petrol in the open market is available at Rs145.82 per litre, HSD at Rs142.62 per litre, kerosene oil at Rs116.53 per litre and LDO at Rs114.07 per litre.

It is pertinent to mention here that prices of petroleum products would have gone down by Rs8 to Rs9 per litre in line with decline in international prices had the government not been under pressure by the IMF.