Tax collection from the oil and gas sector will increase by nine per cent in the upcoming fiscal year against the government’s expectation of a whopping of 33 per cent, according to JS Global Capital.
The recently announced federal budget remained largely a non-event for the oil and gas sector, with status quo maintained for both the deemed duty on high speed diesel for refiners and margins for oil marketing companies.
Moreover, with the government expecting the oil import bill to increase by six per cent and an expectation of three per cent rupee depreciation against the dollar, the collection target will be missed, says JS Global Capital analyst Atif Zafar in a research note.
The government announced an ambitious petroleum development levy (PDL) target of Rs120 billion from petroleum products against target of Rs90 billion in fiscal 2011, adds the note.
The sector contributes 28% to the total tax revenues according to the historical contribution.
Tax is collected in the form of petroleum development levy, sales tax, federal excise duty and customs duty from the sector.
The government in its annual plan for fiscal 2012 set an oil import bill target of $12.1 billion, a growth of 6 per cent on a yearly basis. Considering the scenario, the government find it difficult to meet its total tax revenue target of Rs2.1 trillion, says the note.
Published in The Express Tribune, June 9th, 2011.
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