ISLAMABAD: The government announced on Friday that general sales tax (GST) on petroleum products was being revised so that prices of fuels remained unchanged for a month.

In line with directives of the prime minister, the prices of petroleum products would be kept unchanged for stability, Finance Minister Ishaq Dar told a news conference here.

The Oil and Gas Regulatory Authority (Ogra) had proposed an increase in prices of most of the fuels for the month of March.

However, Mr Dar announced that GST on petrol, kerosene, light diesel oil (LDO) and high octane blen­ding component (HOBC) was being reduced to 18 per cent, from 27pc, to ensure that the prices were not increased.

In a rather “shrewd balancing act”, the government has decided to increase GST on high speed diesel (HSD) to 37pc, to keep its price unchanged. Ogra had proposed that its price be reduced by Rs5.5 per litre.

The minister said that in order to keep the prices unchanged, the petroleum levy was being reduced for all the products — Rs2.07 per litre for kerosene, 18 paisa for petrol, 31 paisa for HSD, 85 paisa for LDO and Rs5.11 for HOBC.

He said the changes in GST made by the government would have little impact on the revenue position. The government was adjusting tax rates for various petroleum products under the powers granted to it by the Constitution.

These powers could be used by the government in future as well because “the fiscal space in the prices had completely been exhausted”, Mr Dar said.

He, however, said the people should remain mentally ready for any upward revision in the prices in future.

The notification regarding the unchanged prices would require some legal amendments which would be made in consultation with the law ministry, the minister said.

“But the announcement is being made now because the prime minister wanted to make the good news public immediately,” he remarked.

He said the prices of petroleum products began to be reduced in late August, causing a Rs68 billion revenue loss to the government. The authorities had managed to recover Rs30bn through a 10pc increase in GST in two instalments.

He said Ogra had suggested a Rs5.59 per litre increase in ex-depot price of petrol, to Rs75.88 from Rs70.29. The price of HSD was proposed to be reduced by Rs5.49 per litre to Rs75.12 from Rs80.61.

Ogra had proposed a Rs12.92 per litre increase in the price of HOBC, to Rs92.93 from Rs80.31.

The price of kerosene was proposed to be increased by Rs7.32 per litre to Rs68.76 from Rs61.44 and that of LDO by Rs5.5 per litre to Rs63.44 from Rs57.94.

Published in Dawn, February 28th, 2015

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