Federal Budget

Petroleum levy target likely to be missed for FY 2023-24

Petroleum levy target likely to be missed for FY 2023-24

Business

Govt charging Rs60 per liter on petrol and Rs50 per liter on diesel as petroleum levy

LAHORE (Dunya Investigation Cell) – The government is charging Rs60 per liter on petrol and Rs50 per liter on diesel as petroleum levy from the consumers.

It should be noted that under the ongoing programme of the IMF, the government is required to charge Rs60 per liter on petrol and Rs50 per liter on diesel as a levy, due to which the government levied Rs5 per liter on Sept 1, reaching the petroleum levy to Rs60 per litre. 

According to the documents released by the finance ministry, the government has set a target of collecting a record Rs869 billion in the form of petroleum levy during the current financial year 2023-2024.

However, keeping the previous approach, the government would not be able to achieve the target of petroleum levy even in the current financial year. Govt is likely to face a loss of more than Rs100.5 billion may be faced.

During the last financial year 2022-2023, petrol sales in the country declined by 16 percent to 7.4 lakh metric tonnes, which was about nine million metric tonnes in the financial year 2021-2022.

Similarly, during the last financial year 2022-2023, diesel sales in the country declined by 24 percent to about 6.4 lakh metric tonnes, which was about 8.9 lakh metric tonnes in the financial year 2021-2022.

By the end of the current financial year 2023-2024, the government will be able to collect Rs447.20 billion by charging a petroleum levy of Rs60 per liter on petrol, while Rs321 billion will be collected by charging a petroleum levy of Rs50 per liter on diesel.

The government has set the petroleum levy target of Rs869 billion for the current financial year 2023-2024.

Thus, during the current financial year 2023-2024, the government will be able to collect petroleum levy of Rs768.53 billion from the sale of petrol and diesel, while the deficit of the government in terms of petroleum levy is expected to be Rs100.50 billion.

According to the documents of the Ministry of Finance, the government faced a loss of more than Rs757.6 billion during the last two financial years in terms of petroleum levy.

A target of Rs855 billion was set in the budget, but the Ministry of Finance was able to collect Rs580 billion.

It should be noted that since the fiscal year 2007-2008 in Pakistan, petroleum levy is being charged on an annual basis by the Ministry of Finance, which is increased every passing year keeping in mind the budget deficit.

In the fiscal year 2008-2009, the target of petroleum levy was fixed at Rs14 billion by the Ministry of Finance, which was fixed at Rs129 billion after revision. It should be remembered that during the last 16 fiscal years, the total target of petroleum levy was set at Rs3.61 trillion by the Ministry of Finance, but the Ministry of Finance could only collect Rs2.83 trillion.

Similarly, out of the last 16 financial years, in six financial years, the Ministry of Finance was able to achieve the petroleum levy target, while in 10 financial years, the finance ministry failed to achieve the petroleum levy target. However, no general sales tax is being charged on petrol by the Ministry of Finance from February 2022.

It should be noted that during the current financial year, the Ministry of Finance has increased the price of petrol by 26 percent and the price of diesel by 30 percent.

Similarly, the caretaker government has increased the price of petrol per liter by 21 percent and the price of diesel by 20 percent.

According to the Ogra documents, during the current financial year, the petrol prices have been increased by Rs69 per liter and diesel prices by Rs76 per liter.