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  • Feb 1st, 2018
  • Comments Off on Prices of HSD, other POL products raised
The government on Wednesday increased per litre prices of petroleum products ranging between Rs 2.98 and Rs 5.93 for this month. The Federal Board of Revenue (FBR) has estimated to collect over Rs 30 billion from this increase in the prices of petroleum products during February 2018, sources said. The government increased price of petrol by Rs 2.98 per litre from existing Rs 81.53 to Rs 84.51. The supply of domestic gas has been suspended to CNG retail outlets in Punjab. The demand of petrol, therefore, has increased manifold.

In monthly review of petroleum products, the price of high speed diesel (HSD) has been increased by Rs 5.92 per litre to Rs 95.83 per litre from Rs 89.91. This product is widely used in transport and agriculture sectors. It will certainly exacerbate inflationary pressures in the economy. The price of kerosene oil has been increased by Rs 5.94 per litre from Rs 64.32 to Rs 70.26. Kerosene is also being mixed in high speed diesel illegally and therefore there has been a shortage of this commodity in local market.

Light diesel oil (LDO) is used in industry. Its price has soared by Rs 5.93 per litre from Rs 58.37 to Rs 64.30 per litre. On Tuesday, Oil and Gas Regulatory Authority (OGRA) had proposed a double digit increase in the rates of HSD by Rs 10.25 per litre, SKO, Rs 12.74 per litre and LDO by Rs 11.72 per litre for the month of February on the basis of increase in prices of petroleum products in the international market.

According to Ministry of Finance''s statement, the government decided to reduce the impact on the consumers through adjustment in the applicable levies. Sources maintained average sales tax collection ranges between Rs 30 billion and Rs 40 billion per month from POL products due to higher rates of sales tax. Keeping in view 28 days of February, the estimated sales tax collection from the POL products could be over and above Rs 30 billion.

During January 2018, the FBR charged 17 percent sales tax on petrol, 25.5 percent sales tax on high speed diesel and 6 percent sales tax on both kerosene and light diesel oil. Under SRO.98(I)/2018 issued by the FBR here on Wednesday, the FBR will continue to charge standard rate of 17 percent sales tax on petrol from February 1, 2018 as compared to same rate last month. In this regard, the FBR has issued a notification late Wednesday night to change in sales tax rates on some petroleum products with effect from 1st February 2018.

From February 1, 2018, High Speed Diesel Oil (HSD) has been subjected to 25.5 percent sales tax as compared to same rate in January 2018. Sales tax on kerosene has been raised from 6 percent to 7 percent from February 1, 2018. Sales tax on light diesel oil has been raised from 6 percent to 7.5 percent from February 1, 2018.

A review of FBR''s statutory regulatory orders (SROs) on petroleum products has revealed that sales tax on petrol in September, October, November and December 2017 as well as January 2018 was charged at standard rate of 17 percent. In August 2017 the applicable rate was 23.5 percent.

In case of high speed diesel, FBR''s notification stipulates a sales tax rate ranging from 25.5 percent to 35.5 percent during the last five months. In August 2017, sales tax on HSD was 35.5 percent, in September, 30 percent, October, 31 percent, November 2017, 31 percent, December, 31 percent, and 25.5 percent in January 2018.

Over the past couple of years - following plunging global crude prices - the government burdened petroleum consumers with general sale tax and petroleum levy. The OGRA proposed a 17 percent GST on various products for "maintaining price stability and earning higher revenue." The FBR claimed that the main reason behind the shortfall in sales tax collection in 2016-17 was a reduction in petroleum prices despite the fact that higher rates of sales tax were charged on POL products during this period including 33 percent sales tax on HSD in November 2016 and 28 percent in December 2016 and January 2017.

Copyright Business Recorder, 2018


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