FBR to Lose Rs. 75 Billion Every Month Due to Reduction in Prices of Petrol & Electricity

The Federal Board of Revenue (FBR) will suffer a huge revenue loss of over Rs. 70-75 billion per month in the remaining period of 2021-22 on account of the decrease in prices of petrol and high-speed diesel (HSD) by Rs. 10 per liter and the decrease of Rs. 5 per unit in electricity rates.

Sources told ProPakistani that the 17 percent sales tax is applicable on the bills issued to domestic and commercial consumers, while the relief announced by the Prime Minister is meant for domestic consumers.

At present, FBR is collecting nearly Rs. 15 billion sales tax a month from electricity, covering all sources like domestic consumers, commercial consumers, and industrial consumers across Pakistan. The relief will have a slightly negative impact on the sales tax collection from electricity, which is a major sales tax spinner of indirect tax collection from domestic sources.

The federal government had announced to reduce the prices of petrol and HSD by Rs. 10 per liter with effect from March 1, 2022, by reducing petroleum levy (PL) rates on petrol and HSD. The government has to bear more than Rs. 70 billion per month impact to keep the prices lower and provide relief to the masses. The amount of Rs. 70 billion includes both sales tax and petroleum levy.

According to a senior official of the Ministry of Finance, zero percent sales tax is applicable on all petroleum products. The government will suffer a monthly revenue loss of Rs. 25 billion from reduced prices of POL products and sales tax collection from the POL sector would be reduced by Rs. 25 per month and over Rs 200 billion in the remaining four months (March-June) of 2021-22.

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