The government is proposing to impose a Rs 10 per liter petroleum fee on POL [petrol, oil, lubricants] items from July 1, 2022, in order to reach a staff-level agreement with the International Monetary Fund (IMF).
But starting in July 2022, there is no chance that general sales tax (GST) will be applied to POL items; instead, it will remain at zero for the time being.
The Ministry of Finance will advise Prime Minister Shehbaz Sharif to impose a petroleum charge of Rs. 10 per liter on POL products with effect from July 1, 2022, as part of an intriguing but well-considered policy developed by the coalition government’s economic team.
Instead of GST, which is nontax income and does not enter the Federal Divisible Pool (FDP) in accordance with the National Finance Commission (NFC) Award, the government prefers to collect petroleum levies.
The Ministry of Finance recommended raising the petroleum tax cap to Rs50 per liter, but it is unable to collect this amount given that the cost of petroleum products has just soared by an unheard-of amount. Since May 27, 2022, POL prices have increased by more than Rs 100 per liter.