The government collected Rs220 billion through the petroleum levy during the first two months of the current fiscal year, official figures show, putting it on course towards an annual target of Rs1.676 trillion.
The collections cover July and August of fiscal year 2026-27. The government has set the annual petroleum levy target at Rs1.676 trillion, to be reached by June 30, 2027 — an increase of Rs109 billion over the Rs1.567 trillion actually collected in the previous fiscal year.
Collections in 2025-26 had themselves exceeded the initial budget estimate of Rs1.468 trillion by nearly Rs100 billion, reaching Rs1.567 trillion by the end of June 2026.
The government is currently charging a petroleum levy of Rs80 per litre on both petrol and diesel. Parliament has empowered the federal government to adjust the levy, allowing it to be raised without seeking fresh parliamentary approval.
Two other fuel-related levies also brought in significant revenue in the same two months. The Climate Support Levy, also called the Carbon Levy, generated Rs27.5 billion, while the New Energy Vehicle Adoption Levy yielded Rs7.225 billion.
The government has set a Climate Support Levy collection target of Rs50 billion for 2026-27, broadly in line with the Rs50.159 billion collected during the previous fiscal year. For the New Energy Vehicle Adoption Levy, Rs22.481 billion has been budgeted this year, compared with Rs10 billion in the previous fiscal year.
The figures come as the government continues talks with Jamaat-e-Islami on ways to reduce the petroleum levy. However, the budgetary framework for 2026-27, agreed with the International Monetary Fund under the $7 billion Extended Fund Facility, leaves little fiscal space for cutting the levy at this stage.
It remains unclear how the government intends to address the demand for rationalising the levy burden. Higher fuel prices have contributed to consumer price inflation, which has hovered close to double digits during the current fiscal year, adding to the cost of living for households and businesses across the country.
The petroleum levy has become one of the government’s most important sources of non-tax revenue. Over the past four fiscal years, collections through the levy totalled about Rs4.4 trillion, exceeding cumulative targets by Rs227 billion, according to official data.
