Consumers bear heavy tax burden on petroleum products

Official documents reveal high taxes, duties, and margins on petrol and diesel

ISLAMABAD: Consumers in Pakistan are shouldering a significant tax burden on petroleum products, with taxes, duties, and margins adding substantial costs to the final retail prices, according to official documents obtained by Geo News.

The documents show that taxes, duties, and margins on petrol and high-speed diesel (HSD) amount to Rs107.12 per litre for petrol and Rs104.59 per litre for HSD. These figures come on top of the ex-refinery prices, which stand at Rs148.51 per litre for petrol and Rs154.06 per litre for HSD.

Both petrol and HSD are subjected to a petroleum levy of Rs70 per litre. Additionally, customs duties of Rs15.28 per litre are applied to petrol, while HSD faces a slightly higher customs duty of Rs15.78 per litre. Dealers also earn Rs8.64 per litre as commission, and oil marketing companies (OMCs) earn Rs7.87 per litre in margin. The inland freight equalization margin (IFEM) stands at Rs5.33 per litre for petrol and Rs2.30 per litre for HSD.

Despite these significant levies, the government has decided not to charge any sales tax on either petrol or diesel at present. As a result, the current retail price for petrol is Rs255.63 per litre, while HSD is priced at Rs258.64 per litre.

On March 15, Prime Minister Shehbaz Sharif announced that the government would maintain the prices of petroleum products for the next fortnight. The government has also decided to redirect any potential savings from lower international petrol prices into a significant reduction in power tariffs for consumers.

The Finance Division has issued a notification confirming that the prices of all petroleum products will remain unchanged at their current levels.

Monitoring Desk
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