The federal government has doubled the Climate Support Levy on petrol and high speed diesel to Rs. 5 per liter, effective July 1, as part of its fiscal measures under the Finance Act 2026 and commitments linked to the IMF program.
According to an official notification, the Climate Support Levy has been increased from Rs. 2.50 per liter to Rs. 5 per liter on both petrol and high speed diesel. The levy came into effect on July 1.
To offset the increase, the government has reduced the Petroleum Levy on both fuels. The Petroleum Levy on petrol has been cut from Rs. 66.66 per liter to Rs. 64.14 per liter, while the levy on high speed diesel has been reduced from Rs. 79.97 per liter to Rs. 70.04 per liter.
The adjustment means the overall tax structure on petroleum products has been revised, with part of the Petroleum Levy being replaced by the Climate Support Levy rather than adding an equivalent new burden on consumers.
The Climate Support Levy was introduced under the Finance Act 2026 as part of Pakistan’s broader fiscal reforms and climate financing commitments. The measure is aimed at generating dedicated revenue for climate related initiatives while aligning the country’s tax framework with reforms agreed under its IMF program.
Despite the reshuffle in fuel levies, retail prices of petrol and high speed diesel remain unchanged, as the increase in the Climate Support Levy has been fully offset by an equivalent reduction in the Petroleum Levy.
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