The federal government has further increased the sales tax on two petroleum products to generate revenue from the consumers.
A notification of the Federal Board of Revenue, issued on Friday, stated that the rate of sales tax was increased to 20 per cent from 18pc on motor spirit (petrol) excluding HOBC and 34pc on high speed diesel oil from 32pc, respectively. The new rates will be effective from May 1, 2015.
The government has been increasing tax rates on oil products since January 2015 to shore up its revenue collection. It increased sales tax from 17pc to 22pc on all petroleum products in January and then to 27pc in February 2015.
The sales tax was decreased to 18pc on the import and local supply of fuels including high octane blending component (HOBC), kerosene and light diesel in March. However, the sales tax on high speed diesel oil was raised from 27pc to 37pc. In the outgoing month the sales tax on high speed diesel oil was reduced to 32pc from 37pc.
The FBR has estimated Rs68 billion less revenue from sales tax on petroleum products this fiscal year because of falling oil prices, and during the first six months of 2014-15 the collection fell by Rs8bn.
However, the taxable sales of petroleum products were higher by Rs16bn in July-Dec period. This clearly shows that the increased demand pushed up overall POL prices.
So the falling oil price impact was compensated by higher consumption of petroleum products to a large extent.
An official in the FBR said that the collection of income tax from oil sector actually witnessed a decline during the first eight months of this fiscal year from a year ago. The government is trying to cover this shortfall by taxing the end consumer.
As per the FBR report, POL products are one of the 10 top revenue spinners. As much as 45pc of total sales tax was collected from petroleum products.
