Govt collects Rs220bn in petroleum levy during first two months of FY27

The government collected Rs220 billion through the Petroleum Levy in July and August, the first two months of the current fiscal year (2026-27), according to official data.

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 its $7 billion Extended Fund Facility (EFF) leaves limited fiscal space for a reduction at this stage.

It remains unclear how the government plans to address JI's demand for rationalising the levy burden. Higher fuel prices have contributed to consumer price index (CPI)-based inflation, which has remained close to double digits during the current fiscal year.

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 brought in Rs7.225 billion.

The government has set a Petroleum Levy collection target of Rs1.676 trillion for 2026-27, compared with the initial budget estimate of Rs1.468 trillion for the previous fiscal year.

However, actual collections in 2025-26, which ended on June 30, 2026, reached Rs1.567 trillion, exceeding the initial target by nearly Rs100 billion.

Under the current budgetary framework, the government aims to increase Petroleum Levy revenue by Rs109 billion to Rs1.676 trillion by June 30, 2027, from Rs1.567 trillion collected in the preceding fiscal year.

The government is currently charging a Petroleum Levy of Rs80 per litre on both petrol and diesel. Parliament has empowered the federal government to adjust the levy without seeking further parliamentary approval.