New Year gift,increased GST on petroleum products
31 December, 2014
ISLAMABAD: The Federal Board of Revenue (FBR) the government has increased the GST on petroleum products (POL) from 17 percent to 22 percent. The decision will deprive masses of an expected relief of Rs 3-6 per litre with the start of January 2015.
Sources in the Finance Ministry told Daily Times that the Federal Board of Revenue, on finding an advice from the Ministry of Finance to jack up General Sales Tax (GST) on different POL products, has issued a notification to this effect. And, with effect to this notification, the public will not receive complete relief of glut in global oil market as they will be deprived of worthy relief of above Rs5billion during the upcoming month of January. They said that though POL prices were estimated to witness up to Rs 17 per litre reduction with the start of New Year due to massive cut in crude price in international markets, finance ministry sprung into action to deprive the consumers from getting the complete relief in POL prices.
According to notification: “In exercise of the power conferred by clause (b) of sub section (2) of section 3 of the Sales Tax Act, 1990, the federal government is pleased to direct that sales tax shall be charged on import and supplies at the rate of twenty-two per cent of the value of goods namely motor spirit including HOBC (high octane blended component), Kerosene, light diesel oil and high speed diesel oil. The notification shall take effect from 1st January, 2015.”
Following the issuance of notification of hike in GST, consumers of petrol will be deprived of Rs3.90/litre, high speed diesel (HSD) Rs4.65/litre, high octane blended component (HOBC) Rs5/litre, Kerosene oil Rs3.50/litre, light diesel oil (LDO) Rs3.30/litre. The sources also said that the government will earn revenue worth Rs19 billion under the head of GST, while it will collect Rs10 billion on account of petroleum levy already imposed on POL products. Oil and Gas Regulatory Authority will forward future POL prices summary today (Wednesday) to the ministry of petroleum & natural resources for approval.
An official at Finance Ministry said that the government will earn revenue worth Rs 30 billion during next six months with effect to the decision of raise GST on POL products. He said that the GST and petroleum levy were approved by parliament through finance bills and the government always has the right to impose a fresh surcharge or levy through an ordinance or a statutory regulatory order (SRO). It is important to note here that inflation-hit masses had been receiving worthy relief in POL prices during last three months only because of historic decrease in the price of crude oil in the international oil market, which currently stands at $56per barrel.
But the FBR could not stomach it. Even Finance Minister Senator Ishaq Dar summoned a meeting of the board on last Sunday to get the calculation about the revenue loss incurred due to passing on relief to POL consumers.