Govt faces huge shortfall in petroleum levy, collects only Rs13.35bn in first quarter

oil jpeg 1 - Govt faces huge shortfall in petroleum levy, collects only Rs13.35bn in first quarter

ISLAMABAD: The government collected Rs13.35 billion under the head of the petroleum levy during the first quarter (July-September) of 2021-22, data released on Wednesday by the Ministry of Finance showed.

The government has budgeted to collect Rs610 billion from the petroleum levy for the entire fiscal year, targeting around Rs152.5 billion from each quarter. Overall, during the quarter under review, the government managed to earn non-tax revenue of Rs275.7 billion, missing the Rs520 billion target by a large margin.

However, the data showed the government has surpassed the tax collection target during the first quarter by around Rs400 billion at Rs1.8 trillion against a target of Rs1.4 trillion for the period.

The largest year-on-year increase in tax collections came under indirect taxes where the government collected Rs917bn, up 3.7 percent compared to the first quarter of the last fiscal year 2020-21.

The International Monetary Fund (IMF) conveyed its annoyance when the government kept the petroleum prices unchanged with effect from November 1, 2021, mainly because Pakistan and the Fund staff had agreed to jack up the petroleum levy for collecting Rs250 to Rs300 billion annually against the earlier envisaged target of Rs610 billion.

The IMF also pointed out that the government created Price Differential Category (PDC) for not raising the POL prices and recommended abolishing this mechanism by raising the fortnightly pricing mechanism.

This shortfall on account of petroleum levy will be compensated through additional taxation measures of Rs200 to Rs300 billion on front of FBR through withdrawal of GST exemptions, adjusting Personal Income Tax and enhancing Regulatory Duty (RD) on luxury items such as imported vehicles, cosmetics, and other such products.

Now the government seems to be forced to move towards increasing the petroleum prices whereby the levy on petrol has been jacked up by Rs4. So the overall levy went up from Rs5.62 per litre to Rs9.62 per litre.

On diesel, the levy was increased from Rs5.14 per litre to Rs9.14 per litre with the recent surge in POL prices announced by the government in the early hours of Friday.

The government has increased the prices of POL products by Rs37.26 per litre with effect from June 15, 2021, to November 5, 2021. The price of petrol went up by Rs37.26 per litre and diesel by Rs31.86 per litre after the announcement of the budget for 2021-22 in the last four months and five days.

On petrol, there is a total of Rs22.64 per litre taxes, duties, margin, and levy and on diesel total taxes, duties, margin, and levy stand at Rs25.54 per litre. The GST on petrol stands at Rs2.6 per litre and Rs9.2 per litre on diesel at the moment with effect from November 5, 2021.

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