It expects to receive Rs1.727 trillion from the petroleum taxes in the fiscal year 2026-27, which is Rs292 billion higher than the target for the current fiscal year. It was able to achieve Rs1.43 trillion even before completing eleven months of the year. This was explained by the cost of petroleum tax per litre at the pump that was made public last week.
ISLAMABAD: It is expected by the government of Pakistan to collect Rs1.727 trillion as their target from the Pakistan petroleum levy for FY2026-27, which will be the most ambitious target ever set for any petroleum levy revenues. It should be noted that the target value of Pakistan petroleum levy for the upcoming FY2027 budget will exceed the revised budget target for the current financial year by as much as Rs292 billion. Also, it will exceed the actual collection in terms of quantity by nearly Rs157 billion. It comes ahead of the June 10 budget submission and highlights the reason for paying Rs377 on refined petrol priced at Rs235 per litre.
Month-by-Month Collection Statistics for Pakistan
The month that collected the most was December 2025 with the sum of Rs162.46 billion. In terms of amount, this is due to high fuel consumption during winter season. July 2025 comes second in total collection with Rs157 billion. Meanwhile, May 2026 registered the least amount with Rs87.5 billion; however, the government forecasts an upward swing in June which could make the yearly collection reach about Rs100 billion more than the projected target for the year.
The Sources of Financing
The petroleum levy projection for FY2027 budgeting is built on a base which is nearly wholly dependent on the importation of oil. Out of the total Rs1.43 trillion generated in the initial eleven months, Rs686.52 billion was raised from levies on imported petrol and diesel oil, and Rs753.54 billion was derived from levies on petroleum products that have been processed from imported crude oil. Thus, nearly the entire levy base consists of these two sources of financing – a fact that demonstrates the dependence of Pakistan on foreign energy supplies.
What is actually needed for the FY2027 Target
A target of Rs1.727 trillion from Pakistan petroleum levy collection in the FY2027 budget indicates an average collection level of approximately Rs143.9 billion per month, as against Rs130 billion per month average that the government managed to collect in FY2026. This calls for either higher volumes of fuel consumption or continuation of the present levy rate per litre, or both. Higher levels of petroleum levies cannot be imposed by the government without passing the burden on to pump prices, which makes FY2027 target contingent on higher volumes of fuel consumption despite rising prices.
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Context for the Budget Pakistan Petroleum Levy as a Source of Revenue
Economists monitoring the fiscal situation in Pakistan characterize the increased targeting of the Pakistan petroleum levy in the FY2027 budget as an indication of the increasing structural reliance of the government on the revenue generated from the fuel levy. Extending the tax system to incorporate wider sources of taxation such as extending the scope of the personal income tax, including the retail and property sectors in the taxable base, and strengthening compliance amongst corporations has been politically difficult. However, the petroleum levy does not require any of that effort to yield revenue.
It is precisely the ease, scale, and ubiquity of the petroleum levy that makes it the most dependable source of revenue for Pakistan. The Rs1.727 trillion target set for FY2027 sends an unequivocal message about its enduring significance in the coming budget cycle. In view of the fact that the levy on Rs377 per litre of petrol currently stands at Rs116, the budget announcement made by the government on June 10 will decide whether this amount stays unchanged or increases.
