FBR Expects Additional Rs. 4 Billion in Revenue This Month - Report - Android

The Federal Board of Revenue (FBR) is estimating an additional revenue of around Rs. 3-4 billion in August 2020 as… Read More

The post FBR Expects Additional Rs. 4 Billion in Revenue This Month: Report appeared first on .

The Federal Board of Revenue (FBR) is estimating an additional revenue of around Rs. 3-4 billion in August 2020 as a result of an increase in the price of petroleum products by up to 11.8%, according to Business Recorder.

The report quoted a senior FBR official saying that the federal government has raised the ex-refinery price of all petroleum products across the board to generate additional revenue under general sales tax (GST) at the standard rate of 17% for August.

The report said that based on monthly consumption of petrol and HSD, an estimated Rs 3-4 billion additional revenue will be generated under GST. These two products are major sources of GST and PL. The average petrol sales are touching 700,000 tonnes per month against monthly consumption of around 600,000 tonnes of HSD. The sales of SKO and LDO are on average around 11,000 and 2,000 tonnes per month.

Sales tax is levied as a percentage of the price, ie, on ad valorem basis, therefore any raise in price would raise total sales tax collection.

The government has reduced the Petroleum Levy (PL) on petrol to Rs. 26.70 per liter and on high-speed diesel oil (HSD) at Rs. 25.73 per liter. The petroleum levy on superior kerosene oil (SKO) is Rs. 6 per liter and Rs. 3 per liter on light diesel oil (LDO).

The Finance Division decided to increase the petroleum prices by up to 11.8% by keeping the GST at the standard rate. The ex-refinery prices of POL products have been increased due to major demand from Oil Marketing Companies (OMCs) and local refineries. However, PL on petrol and HSD have been reduced to minimize the impact of increasing global petrol prices.

The GST on the petrol collection would rise by 56 paise per liter and 70 paise on HSD for the current month. In August the rate of GST on petrol is Rs. 15.11 per liter which was Rs. 14.55 per liter from June 26 to July 31, 2020.

The rate of PL on petrol has also been revised downward by Rs. 3.30 per liter from Rs. 30 per liter to Rs. 26.70 per liter. The rate of GST on HSD is 17 percent. The ex-refinery price of HSD has been calculated at Rs. 58.36 per liter in August which was Rs. 49.28 per liter in (June 26-July 31). An increase of Rs. 9.08 per liter has been allowed in August.

The PL on HSD has been reduced by Rs. 4.27 per liter from Rs. 30 to Rs. 25.73 per liter.

The revenue collected from petroleum levy is not part of the federal divisible pool, whereas sales tax as per the constitution is a component of the divisible pool and distributed as per the seventh National Finance Commission formula: 57.5% provinces with 46.5% for the federal govt. This means that the share of provinces will subsequently increase following raise in petroleum prices.

The Oil and Gas Regulatory Authority (OGRA) worked out an increase of about Rs. 7 per liter in petrol and Rs. 9.50 per liter in HSD for August and Rs. 6 per liter increase in SKO and LDO prices based on existing tax rates and import costs of the Pakistan State Oil (PSO).

The report stated that the government had increased its reliance on the PL to fetch an additional Rs. 234 billion revenue in the budget 2020-21. The overall collection of PL has gone up to Rs0 450 billion against revised estimates of Rs. 216 billion in the financial year 2019-20.

The post FBR Expects Additional Rs. 4 Billion in Revenue This Month: Report appeared first on .