FBR reduces sales tax on petroleum products

Federal Board of Revenue, via a notification dated 31^st July 2018, decreased the rate of sales tax on various petroleum products, with the reduction being applicable from August 1^st 2018.

Sales tax for motor spirit, excluding High Octane Blending Component (HOBC), has been reduced to 9.5% of the transaction value from the 12% rate that was being applied from 8^th July 2018.

The largest drop in sales tax has been for light diesel oil, the rate for which has been reduced to 1% of the transaction value, compared to 9% previously.

Similarly, the sales tax rate for Kerosene has been cut into half after setting it at 6% of the transaction value, compared to 12% set before.

Tax reduction for High-speed diesel oil has been marginal, with a reduction of merely 2% as the new sales tax has been announced at 22% of the transaction value, down from the 24% tax rate previously.

The relief in petroleum prices is expected to serve towards reducing the costs of production and providing the much-needed respite to the masses, while giving a boost to the economic activity.