The International Monetary Fund (IMF) has called for the reinstatement of an 18% General Sales Tax (GST) on petroleum products and proposed increasing the petroleum levy to Rs70 per liter.
An IMF delegation, led by Pakistan Mission Chief Nathan Porter, visited Pakistan in early November for technical discussions. As part of these talks, the IMF suggested imposing GST on petroleum products, which is currently set at zero. The existing petroleum levy of Rs70 per liter may also see further hikes.
During the 2024-25 budget preparation in July, a similar proposal to apply the standard 18% GST on petroleum products was rejected by the prime minister due to its inflationary impact on the public.
How much will petroleum prices go up after 18% GST?
If the federal government imposes an 18% GST on petroleum products, prices for MS Petrol, High-Speed Diesel (HSD), kerosene oil, and light diesel oil (LDO) could rise by approximately Rs45 per liter.
However, the government is exploring the possibility of offsetting this hike by reducing the petroleum levy from Rs70 to Rs45 per liter and introducing the 18% GST instead. The IMF has indicated that this adjustment would be acceptable as long as it meets revenue targets.
