Govt. finds error in diesel pricebuild-up

The govt. has finalised two options for reducing the price of high-speed diesel (HSD) on orders of the Chief Justice of Pakistan. The govt. has been found on the wrong foot in the HSD pricing build up and is now ready to reduce its General Sales Tax (GST) to either 24% or 17%. OGRA has been assuming GST on HSD at 31% in summaries to the govt. on the advice of the finance ministry, even if the actual notified GST rates were on the lower side. Based on a n artificially inflated GST rates, the previous govt. used to claim credit for not passing on full price increase recommended by Ogra and protect its revenue stream at the same time. The govt. is currently collecting about PKR 28.23/litre on HSD on the basis of 31% GST which would come down to PKR 21.86/litre if the GST rate is reduced to 24%.Likewise,the tax on HSD would drop to PKR 15.50/litre if standard GST rate of 17% is applied. At existing rates, the govt. recovers about PKR55 Bn per month on all petroleum products, including about PKR30 Bn on HSD alone, followed by PKR 22 Bn on petro land PKR 500 Mn on other products.