The government’s take to reduce sales taxes on petroleum products would likely cause rupees sixty billion in losses during the first half of the present fiscal year that is July-Dec 2018-19.
To protect the consumers from the full blast of the increasing oil prices, the government has been decreasing sales tax which as per tax authorities approximates a significant reduction of forty-six per cent in the revenue collection in the month of November 2018, as per the reports of The News.
As per sources, the indications suggested by the Large Taxpayers Unit (LTU) Karachi showed the continuing decrease in sales tax on two major fuels, namely motor and high-speed diesel (HSD) which could bring the collection under its head down to Rs 15.7 billion in the month of November from twenty-nine billion rupees in the same month of last year.
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Additionally, sources are of the belief that the reduction in the sales tax rates on petroleum oil and lubricant (POL) production were the major reason of drag on revenue collection and LTU Karachi hinted the possibility of revenue losses to reach a huge amount of sixty billion rupees during the span of July-December of the financial year 2019.
The major source of revenue collection for the government have been POL products, but, sources say owing to the historically low sales rates on POL, it would become highly demanding for the tax authorities to reach the yearly revenue collection target.
Since the start of the FY19, the sales tax rates on petrol have experienced a continuous decline. The sales tax on petrol falls sixteen per cent in the month of July as compared to the former month of the fiscal year 2017.
Sales tax on petrol decreased by thirty per cent, twenty-two per cent and sixty-three per cent in the months of August, September and October respectively.
Sales tax reduction for petrol was indicated at sixty-one per cent for the month of November, however, sales tax on HSD was raised by 9 per cent, 0.44 per cent and 7.5 per cent for the months of July, August and September in comparison to the same months last year.
However, the authorities took the decision of reducing sales tax on HSD by 15.54 per cent on a yearly basis in October and 39.56 per cent in November.
The sales tax rates on petrol and HSD for the month of November were set at 4.21 and 12 per cent by the government.