Govt Likely to Raise Tax on Fuel to Rs. 180 per Litre in Next Budget

The federal government is projected to collect Rs. 1.73 trillion under the Petroleum Development Levy (PDL) in FY27, reflecting a 17.8 percent year-on-year increase, according to Arif Habib Limited (AHL).

The projection suggests that meeting the target may require an increase in the combined levy on petrol (MS) and high-speed diesel (HSD) from around Rs. 160 per litre to nearly Rs. 180 per litre.

AHL assumes that fuel consumption will remain largely flat, as higher prices could suppress demand and potentially encourage fuel smuggling, especially in border regions.

However, the outlook also notes that stronger economic activity, lower global oil prices, improved domestic fuel demand, or stricter anti-smuggling enforcement could support higher volumes.

In that case, the government may be able to achieve revenue targets without significantly increasing levies.