The government has increased the tax rate of natural gas and petroleum products with effect from 1st September. The government is about to request... Government increases Gas and Petroleum taxes

The government has increased the tax rate of natural gas and petroleum products with effect from 1st September. The government is about to request IMF for disbursement of $506 million tranche, therefore it had to increase the tax rates in order to fulfill IMF’s demand before it can request the disbursement.

Gas tariff has been increased up to 67 percent for different consumers. Domestic users consuming maximum 100 cubic meters of gas have the tariff increased by 3.8% from Rs106 to Rs110 per million British Thermal Unit, while those who consume between 100 to 300 cubic meters have their tariff increased by also 3.8% from Rs212 to Rs220 per million British Thermal Unit.

Industry, power, and fertilizer consumers have their tax rate increased by 23% from Rs488 to Rs600 per million British Thermal Unit. CNG tariff has been increased by 16.7% from Rs600 to Rs700 per million British Thermal Unit. Meanwhile, commercial consumers have their tax rate increased by 9.9% from Rs637 to Rs700 per million British Thermal Unit. Captive power plant consumers have their tax increased by 4.7% from Rs573 to Rs600 per million British Thermal Unit.

Cement industries only had their tax rate increased by less than 1% from Rs743 to Rs750 per million British Thermal Unit while old fertilizer feed plants had their tax rate increased by 63% to Rs200 per million British Thermal Unit and new fertilizer feed plants had their tax rate increased by 66.7% to Rs72 per million British Thermal Unit.

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The increase in tax rate will raise over Rs7 billion for the government and Rs42 billion for Sui Northern Gas Pipeline and Sui Southern Gas Pipeline.

Oil and Gas Regulatory Authority had recommended the government to reduce the petroleum prices by at least 8%, but the government increased petroleum tax which resulted in a reduction of prices by only 3.6%. This resulted in a flat price reduction of all petroleum products by just Rs3 instead of the recommended Rs8 per liter. Petrol tax would raise Rs10 to 12 billion in revenue, and the tax rate is the highest ever on petroleum products.