Govt recasts fuel levies, keeps overall tax unchanged

ISLAMABAD: The federal government has restructured the levy regime on petroleum products by reducing the Petroleum Levy on petrol and high speed diesel by Rs2.50 per litre each while increasing the Climate Support Levy by an identical amount, effectively keeping the overall tax burden on both fuels unchanged.

The Ministry of Energy (Petroleum Division) issued a revised notification on Wednesday, superseding its June 26, 2026 notification, to modify the levy structure under the Petroleum Products (Petroleum Levy and Climate Support Levy) Ordinance, 1961. The revised rates will come into force from July 2, 2026 and remain applicable until further orders.

Under the revised notification, the Petroleum Levy on Motor Gasoline (Motor Spirit) sold through retail outlets has been reduced from Rs66.64 per litre to Rs64.14 per litre, while the levy on High Speed Diesel (HSD) has been brought down from Rs79.54 per litre to Rs77.04 per litre.

However, the government has simultaneously increased the Climate Support Levy on both petrol and HSD from Rs2.50 per litre to Rs5.00 per litre, offsetting the reduction in the Petroleum Levy. As a result, the combined levy on both products remains unchanged, and there is no impact on the overall taxation component of their prices.

For direct sales, the Petroleum Levy has been fixed at Rs72.78 per litre on Motor Gasoline and Rs85.68 per litre on High Speed Diesel. A Climate Support Levy of Rs5.00 per litre will also apply to direct sales of both products.

The revised notification further provides that the petroleum levy on H.O.B.C. (97 RON) and MS (95 RON) has been fixed at Rs89.14 per litre for sales through retail outlets and Rs91.29 per litre for direct sales. These products will also attract a Climate Support Levy of Rs5.00 per litre.

The levy structure on other petroleum products remains unchanged. The Petroleum Levy on Superior Kerosene Oil (SKO) continues at Rs20.36 per litre for both retail and direct sales, while Light Diesel Oil (LDO) remains subject to a Petroleum Levy of Rs15.84 per litre. No Climate Support Levy has been imposed on either SKO or LDO.

For Furnace Oil, the Petroleum Levy has been maintained at Rs77.00 per litre, equivalent to Rs82,077 per metric tonne, while the Climate Support Levy remains Rs5.00 per litre, equivalent to Rs5,330 per metric tonne.

The notification has been issued in exercise of the powers conferred under Section 3 of the Petroleum Products (Petroleum Levy and Climate Support Levy) Ordinance, 1961 (XXV of 1961), read with the Ministry's Notification No. S.R.O.250(I)/2016 dated March 24, 2016. It supersedes S.R.O.1062(I)/2026 dated June 26, 2026.

In a separate communication circulated with the notification, the government clarified that the revision relates only to the Petroleum Levy and Climate Support Levy. It emphasized that all other pricing parameters remain unchanged and will continue to apply as communicated through the email issued on June 26, 2026.

The revised notification, bearing No. PL-3(457)/2026-86, has been signed by Director General (Oil) Imran Ahmed and will take effect from July 2, 2026, until further orders.