Petrol and diesel tax may jump to Rs180 per litre in Budget 2026-27

A new projection shows the federal government may increase taxes on petrol and high-speed diesel to meet its revenue goals for FY27. The expected collection under the Petroleum Development Levy is estimated at Rs1.73 trillion, showing a 17.8 percent increase from the previous year.

According to estimates shared by Arif Habib Limited, fuel consumption is expected to remain mostly unchanged. Higher fuel prices may reduce public demand and could also encourage fuel smuggling in border areas.

The report suggests that the combined levy on petrol and diesel may need to rise from around Rs160 per litre to nearly Rs180 per litre. This increase could become part of the government’s broader Budget 2026-27 revenue strategy.

However, experts believe the government may avoid a major levy hike if economic activity improves. Lower global oil prices and stronger local fuel demand could also help authorities meet targets without putting extra burden on consumers.

Officials are also hopeful that stricter anti-smuggling measures may improve fuel sales within the country. If enforcement becomes stronger, the government could collect higher revenue without sharply increasing petroleum taxes.

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The government appears to be relying heavily on petroleum taxes to increase revenue. Any major rise in fuel levy could directly affect transport and daily living costs. Much will depend on oil prices and the overall economic situation in the coming months.