Staring at revenue shortfall in billions of Rupees, the federal government may decide to impose 17 percent general sales tax (GST) on petroleum products from November 16, 2022. Since March 1, 2022, petroleum products have been exempted from GST.
Petroleum prices in Pakistan have remained unchanged since October 16, 2022, though the petroleum development levy (PDL) has been consistently increased, now reaching Rs.50 per litre on petrol.
However, the government has been unable to raise enough from PDL in the months of July – September 2022 – 23, due to decline in petroleum products sales partly because of their high prices and declining car sales in Pakistan.
To make up for the lost revenue, the government may decide to impose GST on all petroleum products or increase PDL on High Speed Diesel (HSD) which is currently Rs.4 per litre or impose both GST and increase PDL on diesel.
Petroleum prices may further increase this month due to expected oil production cuts by OPEC, increasing the price of petroleum products.
Targets & Shortfalls
The government has set itself the revenue target of Rs.62.5 Billion from PDL each month. However, in the months of July, August and September, it was only able to raise Rs.15 Billion, Rs.17 Billion and Rs.20 Billion, respectively. So, in these three months alone, the revenue shortfall is more than Rs.135 Billion as compared to expected revenue collection of Rs.187.5 Billion.
By imposing 17 percent GST, the government aims to raise Rs.30 Billion per month.
Do you think it is fair to charge GST on petroleum products? Let us know.
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