ISLAMABAD: The federal government collected Rs220 billion through the Petroleum Levy during the first two months (July and August) of the current fiscal year 2026-27, according to official data.
Thank you for reading this post, don't forget to subscribe!The government is continuing negotiations with Jamaat-e-Islami (JI) over ways to reduce the petroleum levy. However, the budgetary framework agreed with the International Monetary Fund (IMF) under the $7 billion Extended Fund Facility (EFF) leaves limited fiscal space for any reduction at this stage.
It remains unclear how the government plans to address JI’s demand for rationalising the levy burden. Meanwhile, higher fuel prices have contributed to consumer price index (CPI)-based inflation, which has remained close to double-digit levels during the current fiscal year.
In addition to the Petroleum Levy, the Climate Support Levy, also known as the Carbon Levy, generated Rs27.5 billion during July and August, while the New Energy Vehicle (NEV) Adoption Levy contributed Rs7.225 billion.
The government has set a Petroleum Levy collection target of Rs1.676 trillion for FY2026-27, compared with the initial budget estimate of Rs1.468 trillion for the previous fiscal year. However, actual collections in FY2025-26 exceeded the original target by nearly Rs100 billion, reaching Rs1.567 trillion by June 30, 2026.
Under the current budgetary framework, the government aims to increase Petroleum Levy collections by Rs109 billion to Rs1.676 trillion by June 30, 2027, compared with the amount collected during the preceding fiscal year.
The government is currently charging a Petroleum Levy of Rs80 per litre on both petrol and diesel. Parliament has authorised the federal government to adjust the levy, enabling it to increase the rate without seeking further parliamentary approval.
For FY2026-27, the government has set a Climate Support Levy collection target of Rs50 billion, broadly in line with the Rs50.159 billion collected during the previous fiscal year. Official figures show that the levy generated Rs27.5 billion in the first two months.
Similarly, the government has budgeted Rs22.481 billion through the NEV Adoption Levy for the current fiscal year, compared with the previous year’s target of Rs10 billion. Collections under this head reached Rs7.225 billion during July and August.
Story by Mehtab Haider
