FBR to collect levies on petroleum products

The federal government has authorised the Federal Board of Revenue (FBR) to collect Petroleum Development Levy (PDL) and Climate Support Levy (CSL) on petroleum products across the country, formally designating the tax authority as an agent of the Ministry of Petroleum and Petroleum Division.

According to official documents available to The Express Tribune, the FBR has issued SRO 800(I)/2026, introducing amendments to the Sales Tax Rules 2006. The notification establishes a revised mechanism under which the FBR will act on behalf of the relevant ministries for the collection of both levies.

The notification also introduces a structured system for levy collection through the issuance of a domestic sales invoice (DSI), aimed at standardising reporting and ensuring compliance across the petroleum supply chain.

Under the new framework, all registered purchasers of petroleum products, including petrol pumps, will be required to submit detailed transaction data in a prescribed format. Officials said this includes comprehensive disclosure of sales and applicable levies at each stage.

As per Annexure-L of the amended rules, registered entities must provide buyer details such as National Tax Number (NTN), Computerised National Identity Card (CNIC) numbers, names of purchasers, and the nature of transactions. They are also required to report HS codes, dates of sale, type of transaction, quantity sold in litres, and total value of sales.

In addition, the notification mandates that businesses separately declare the rate and amount of PDL and CSL applied to each transaction. In cases where exemptions or zero-rated supplies are applicable, relevant SRO and schedule references must also be provided, along with the number of items sold.

FBR officials confirmed that the board will now function as a collection agent for the Ministry of Petroleum and Petroleum Division in respect of both levies. They said the amendments specifically update Annexure-L of the monthly sales tax return form STR-7 within the Sales Tax Rules 2006.

Officials further noted that the CSL was introduced through the Finance Bill 2025 and came into effect from July 1, 2025. The levy is intended to support financial measures aimed at addressing environmental and climate-related challenges.

They added that the integration of STR-7 into the monthly tax return system formalises the mechanism for collection of both CSL and PDL, while also improving documentation and reporting standards. A DSI system has also been introduced to support the implementation of the levies and strengthen tracking of petroleum product transactions.

FBR officials emphasised that there is no change in the existing tax rates or overall levy structure. They clarified that the revision relates solely to the collection mechanism, with the FBR acting as an intermediary for the concerned ministries under the existing legal framework.