PD tells NA body Rs2.50/litre carbon levy to apply from July 1

ISLAMABAD: Petroleum Division Thursday informed National Assembly's Standing Committee on Finance that the carbon levy of Rs2.50 per litre will be imposed on petroleum products from July 1, 2025.
Senior officials from the Petroleum Division informed that at present, petroleum levy stands at Rs77/litre on high-speed diesel (HSD) and Rs78.02/litre on petrol. The government plans to cap it at Rs90/litre. Furnace oil, while phased out from public power plants, continues to be used by IPPs (Independent Power Producers).
The government plans to borrow Rs1.275 trillion from commercial banks at a rate 0.9 per cent below the three-month KIBOR to retire existing power-related debts.
Rs77 per litre PL on furnace oil likely
'This will eliminate IPPs and Power Holding Company liabilities in six years,' the secretary power division said, adding that Rs683 billion will go toward Power Holding Company dues alone, with Rs323 billion repaid annually. The surcharge of Rs3.23/unit will not apply to lifeline consumers, who continue to receive subsidised rates, he stated.
The Committee considered the Amendments in the Petroleum Products (Petroleum Levy) Ordinance,1961. The Committee approved the proposed amendments in principle, with the observation that the Ministry shall brief the Committee on the issue of whether the proposed measure should be classified as a levy or a tax.
Committee Chairman Naveed Qamar clarified the recommendation for solar taxation originated from the National Assembly panel, not the Senate, refuting member Mubeen Arif's claim. 'It was our recommendation, not the Senate's,' he asserted.
Earlier, Qamar recalled, the committee had suggested avoiding any tax on solar to promote renewable energy.
The committee also discussed plans to boost electric vehicle (EV) production as per global climate commitments. While Pakistan currently has 76,000 EVs, officials aim to raise production to 2.2 million in five years, mostly comprising electric motorcycles.
However, concerns arose as officials revealed the government plans to finance EV subsidies by levying new taxes on vehicle buyers. According to the Industries Secretary, a 1pc levy will apply to cars up to 1300cc, 2pc for cars between 1301cc–1800cc, and 3pc for cars above 1800cc. Committee members were surprised to learn that these levies were not mentioned in the Finance Bill 2025-26.
The Committee considered the amendments in the enactment of the New Energy Vehicle Adoption Levy Act, 2025.
During detailed deliberations, the Committee observed that there is no comprehensive plan in place for the transition to Electric Vehicles (EVs), particularly due to the inadequate availability of recharging stations. Accordingly, the proposed shift to EVs and the corresponding imposition of tax were deemed unsatisfactory and lacking a proper implementation framework.
It was further noted that hybrid vehicles have not been included in the proposed measures. Given these concerns, the Committee decided to defer consideration of the matter until the next meeting, with directions to the Ministry to present a comprehensive and actionable plan for the implementation of the objectives outlined in the proposed bill.
The Committee considered the amendments in the Sales Tax Act, 1990. The Committee undertook a clause-by-clause examination of the proposed amendments to the Sales Tax Act, 1990. Following detailed deliberations, the Committee approved the majority of the clauses.
However, it proposed amendments to certain provisions where deemed necessary. Provisions relating to fraud were deferred for further consideration, and the Bill was accordingly deferred for reconsideration in the next meeting.
Furthermore, the Committee recommended a review of the Export Finance Scheme (EFS) concerning raw cotton, and suggested that tax imposition on local production be brought at parity with that on imported cotton. It was further recommended that these observations be forwarded to the Secretary of Commerce and Chairman, Federal Board of Revenue (FBR), for necessary action and compliance.
The Committee considered the amendments in the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (XL of 1997). After detailed deliberations, the Committee recommended that the revised amended draft, as submitted by the Ministry, be approved.
The Committee considered the proposed amendments to the Stamp Act. During detailed deliberations, it was observed that the term non-filer is being used in the proposed amendment, even though this category has been removed from the applicable laws. In light of this inconsistency, the Committee decided to defer consideration of the amendment until the next meeting.
Copyright Business Recorder, 2025

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