Government expected to increase petroleum levy to meet Rs1281 billion target

ISLAMABAD: To achieve the petroleum levy collection target of Rs1281 billion for the current fiscal year, the federal government is considering raising the levy to its maximum allowable level.

As reported by The Nation, the current collection trajectory suggests that the government will only reach Rs1100 billion by the end of the ongoing fiscal year 2024-25.

For the first time, the government has reported the highest levy collection in the first half of a financial year, with Rs549.41 billion collected between July and December 2024. This translates to an average monthly collection of Rs91.57 billion during that period. If this trend continues, the total expected collection for the year could fall around Rs1100 billion, falling short of the Rs1281 billion target.

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The petroleum levy collection has risen by Rs76.67 billion year-on-year from July to December 2024-25, compared to Rs472.77 billion in the same period of the previous fiscal year. The target for the current fiscal year stands at Rs1281 billion, with the previous year’s collection reaching Rs1019 billion, surpassing the revised target of Rs960 billion, and the year before that at Rs580 billion.

Currently, the government applies a petroleum levy of Rs60 per litre on petrol and high-speed diesel. To align with the Rs1281 billion target for FY 2024-25, the government has already increased the levy from Rs60 to Rs70 per litre in the finance bill for the ongoing fiscal year.

To meet the target, the government will need either a 30 percent increase in petroleum product sales during the latter half of FY 2024-25 or a further increase in the petroleum levy on petrol and HSD to the new maximum of Rs70 per litre.