Fuel taxes generate Rs166.4 billion in one month as petrol, diesel rates rise

The figures show how important petrol and diesel have become for government revenue.

More than Rs100 tax on every litre

Government fuel prices show that motorists pay several fixed charges on petrol and high-speed diesel. These include the Petroleum Levy, Climate Support Levy and Customs Duty.

Petrol is priced at Rs329.82 per litre, with Rs80.00 charged as Petroleum Levy, Rs5.00 as Climate Support Levy and Rs21.24 as Customs Duty. Together, these charges total Rs106.24 per litre, or about 32% of the retail price.

For high-speed diesel, the retail price stands at Rs382.36 per litre. The government collects Rs73.47 in Petroleum Levy, Rs5.00 in Climate Support Levy and Rs15.68 in Customs Duty, making the total Rs94.15 per litre.

Pakistan currently charges zero GST on petrol and diesel. Instead, the government depends heavily on fixed levies and customs duties, which provide more predictable revenue.

Rs166.4 billion collected in July

Oil marketing companies reported petrol consumption of about 979.9 million litres in July 2026. Diesel consumption stood at around 738.1 million litres, taking total fuel use to nearly 1.72 billion litres.

Based on the applicable rates, petrol generated around Rs99.95 billion for the government. Diesel contributed another Rs66.43 billion, bringing the combined collection to about Rs166.37 billion.

On average, each litre of petrol and diesel sold generated roughly Rs101 for the federal government through the three charges. This means fuel taxes are contributing a major share of government income from everyday economic activity.

Annual fuel tax collection nears Rs2 trillion

Based on estimated 2025-26 consumption of 10.3 billion litres of petrol and 8.2 billion litres of diesel, annual collections from the three charges could reach nearly Rs1.86 trillion. Petrol could contribute about Rs1.09 trillion, while diesel could generate around Rs770 billion.

The projected amount represents about 14% of Pakistan’s annual FBR tax collection. This makes petroleum taxation one of the government’s largest and most dependable sources of revenue.

The government also has a strong reason to maintain petroleum taxes because Petroleum Levy receipts go directly to the federal government. Unlike GST, these receipts are not shared with provinces under the National Finance Commission Award.

The Climate Support Levy also goes to the federal government, while customs duties on imported petroleum products provide additional income. Together, these charges give the government a steady monthly revenue stream even when international oil prices change.

Fuel taxes have become a key part of Pakistan’s public finances. They provide the government with steady income, but they also make fuel prices more important for households and businesses.

Lower fuel taxes could give consumers quick relief, especially by reducing transport and freight costs. However, such a move could also create a large revenue gap for the government while Pakistan is trying to control its budget deficit and meet economic reform targets.

The figures show a difficult balance between revenue and relief. Higher fuel taxes support government finances, while lower fuel costs could help reduce pressure on inflation and the overall cost of living.

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