Raising GST from 22 to 27pc: govt recovering Rs68 bn loss

ISLAMABAD: By raising GST rate from 22 percent to 27 percent on petroleum products in a row during second month, Federal Minister for Finance Ishaq Dar said that the government was recovering Rs68 billion losses on account of GST in the wake of reduction in oil prices in international market.
“Of total estimated losses of Rs68 billion in shape of GST on petroleum products, the government has recovered Rs16 billion last month by raising GST rate and another Rs12 billion will be recovered, so total recoveries will be standing at Rs28 billion in two months. There will be remaining Rs40 billion losses,” the federal minister for finance said while addressing news conference here at P Block on Saturday.
In this regard, the FBR on Saturday issued SRO for slapping 5 percent increase in GST rate on petroleum products, raising it from 22 percent to 27 percent in the second row with effect from February 1, 2015. Earlier, the FBR had raised GST rate from 17 percent to 22 percent in the first phase from Jan 1, 2015.
The minister said that Pakistan did not make awkward move by raising rate of GST as India enhanced taxes and levies four times after witnessing decrease in prices of international market.
He said that the prime minister was briefed about OGRA’s calculation for proposing reduction in petrol prices to the tune of Rs10.75 per litre, and the government decided to retain Rs2.6 by raising the tax rate and benefit of Rs7.99 per litre was passed on to consumers with effect from Feb 1, 2015. The new price of petrol will be standing at Rs70.29 per litre with effect from Feb 1, 2015, from earlier prices of Rs78.28 per litre.
Ogra proposed reduction of Rs8.80 per litre in prices of High Speed Diesel (HSD) and after retaining Rs3.18 per litre, the benefit of Rs5.62 per litre was passed on to consumers. The new price of HSD will be standing at Rs80.61 per litre from Feb 1 against earlier prices of Rs86.23 per litre.
It was proposed that the prices of kerosene to be reduced by Rs12.90 per litre, but the government retained Rs2.42 and passed on the benefit of Rs10.48 per litre. The new prices of kerosene will be standing at Rs61.44 per litre from Feb 1 against earlier prices of Rs71.92 per litre.
Ogra proposed reduction in Light Speed Diesel (LSD) to the tune of Rs11.84 per litre, but the government retained Rs2.28 per litre and passed on benefits of Rs9.56 per litre with effect from Feb 1, 2015. The new prices of LSD will be standing at Rs57.95 against earlier prices of Rs57.94 per litre.
The price of High Octane was proposed reduction of Rs14.98, but the government retained Rs3.16 for recovery of losses and passed on benefits of Rs11.82 per litre.The new price of High Octane will be standing at Rs80.31 from Feb 1 against earlier price of Rs92.13.
The minister said that the price of petrol decreased by Rs37.60 per litre since August last year as the prices decreased from Rs107.93 to Rs70.29 per litre. The domestic prices of diesel decreased by Rs28.73 per litre, kerosene oil by Rs35.61 per litre, LSD by Rs35.33 per litre and High Octane by Rs54.32 per litre after steep decline in prices in international market, the minister added.