KARACHI: The government has raised rate of sales tax on furnace oil in a bid to increase its revenue collection, which had a hit due to declining global oil prices vis-à-vis petroleum prices in the local market.
According to SRO 962(I)/2015, sales tax rate of furnace oil has been increased to 20 percent from 17 percent effective October 1, 2015.
Moreover, SRO 963(I)/2015, notified an increase of 5.0 percent sales tax on high speed diesel effective from October 01, 2015. The new rate of sale tax on high speed is fixed at 50 percent.
Most of the independent power plants in the country run on furnace oil and high speed diesel and according to the economic survey 2014/15 around 50 percent electricity generated in the country is thermal based.
The increase in sales tax on furnace oil would increase the cost of electricity generation, which would result in higher prices for consumers as well as higher subsidy to be borne by the government.
Instead of passing the benefit of low international oil prices to the masses the government preferred to enhance revenue and in recent past several times increased sales tax rates on petroleum products.