ISLAMABAD: The prices of all petroleum products are set to significantly go up on Tuesday owing to higher international prices and some adjustments in tax rates. Three different options are under consideration of the government.
Based precisely on existing tax rates and oil import price, the ex-depot price of high-speed diesel (HSD) is estimated to go up by Rs5.58 per litre and that of petrol by Rs4.27 per litre. Similarly, the ex-depot prices of kerosene oil and light diesel oil (LDO) are calculated to increase by Rs3.77 and Rs4.05per liter, respectively, under existing rates.
At present, the government is charging 17pc GST on HSD and petrol followed 9.15pc on kerosene and 2.74pc on LDO. The existing petroleum levy stands at Rs5.14pc on HSD, Rs4.80 per litre on petrol and zero on kerosene and LDO.
Under the second option which is based on standard 17pc GST and full petroleum levy permissible under the law, the ex-depot prices of HSD and petrol are calculated to go up by Rs32.67 and Rs33.76 per litre, respectively. Likewise, the ex-depot price of kerosene and LDO are worked out to be higher by Rs23.84 and Rs27.09 per litre, respectively. Under the existing law, the government can increase petroleum levy to a maximum of Rs30 per litre on HSD and petrol, Rs12 on kerosene and Rs10 per litre on LDO.
Officials said that based on current year’s revised revenue estimates, the government is expected to adopt a third option. This means the tax rates — petroleum levy in case of HSD and petrol and both petroleum levy and GST in case of kerosene and LDO — would be increased by at least Rs2 per litre in addition to the higher imported prices. In that case, the prices of all products would be increased in the range of Rs6-8 per litre.
The price of HSD at present is Rs110.76 per litre, followed by Rs108.56 of petrol, Rs80 of kerosene and Rs77.65 per litre of LDO.
The government had already collected higher than targeted revenue on petroleum products through petroleum levy in the 11 months of the current fiscal year. Therefore, it was comfortable with minor adjustments in petroleum levy. According to the Ministry of Finance, the collection on account of petroleum levy had amounted to Rs370bn in first nine months against annual target of Rs450bn. The actual collection through petroleum levy has now been revised to Rs500bn as part of budget 2021-22.
Over the last two years, the government has been tweaking with petroleum levy rates instead of GST as levy remains in the federal kitty while GST goes to the divisible pool taxes and thus about 57pc share is grabbed by the provinces.
The petrol and HSD are two major products that generate most of revenue for the government because of their massive and yet growing consumption. Average monthly sales of petrol and diesel are touching 700,000 tonnes and 600,000 tonnes, respectively. While the demand for kerosene and LDO stand less than 11,000 and 2,000 tonnes.
Published in Dawn, June 15th, 2021