After six months of claiming credit for reducing prices of petrol and diesel, the government increased on Tuesday their prices by Rs4 and Rs3 per litre, respectively, for April.
In doing so, the government reduced general sales tax on high speed diesel (HSD) from 37 to 32 per cent and made minor adjustments in petroleum levy on other products, with a negligible net revenue loss.
But, an official said, restoration of the standard 17pc GST rate on HSD could have cut its price by a couple of rupees per litre. The price reductions over the past six months were announced by Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar as international oil prices declined steadily. The prices of kerosene, light diesel oil (LDO) and high octane blending component (HOBC) have been kept unchanged, according to a statement issued by the finance ministry. The GST on petrol, kerosene, HOBC and light diesel was maintained at 18pc unlike the standard 17pc on all goods and services. The ex-depot price of petrol was increased by Rs4 to Rs74.29 per litre and HSD by Rs3 to Rs83.61.
In a clever political trade-off, the government reduced petroleum levy on HOBC by Rs7 per litre and on kerosene and light diesel by Rs2.5 to keep their prices unchanged by maintaining higher increase in HSD. The levy on petrol and HSD was protected. On the basis of existing tax rates, the Oil and Gas Regulatory Authority had proposed to increase petrol price by Rs4 per litre, HSD by Rs6.25, HOBC by Rs7.66 and kerosene by Rs1.56.