ISLAMABAD – Pakistani government raised Climate Support Levy to Rs5 Per Litre under its commitments to the International Monetary Fund (IMF), while lowering Petroleum Levy on both petrol and high-speed diesel (HSD).
According to notification issued by Petroleum Division, Climate Support Levy on petrol has been increased from Rs2.50 to Rs5 per litre, effective July 1. The same Rs5 per litre levy will now apply to high-speed diesel after the government revised the tax structure on petroleum products.
At the same time, the Petroleum Levy on both petrol and HSD has been reduced by Rs2.50 per litre. After the revision, Petroleum Levy has been lowered from Rs66.64 to Rs64.14 per litre, while the levy on high-speed diesel has been reduced from Rs79.54 to Rs77.04 per litre.
Despite changes in the tax regime, motorists will not see any immediate relief or increase at the pump, as the prices of petrol and diesel will remain unchanged until the next scheduled fortnightly fuel price review. The levy adjustments form part of Pakistan’s broader fiscal commitments under the IMF programme, with the government expecting the Climate Support Levy to generate Rs48 billion during the 2025-26 fiscal year.
Official figures show that the levy has already become source of revenue. Between July 2025 and March 2026, the government collected Rs37.27 billion through the Climate Support Levy alone.
The revised taxation framework also aligns with the government’s ambitious revenue targets for the coming fiscal year. Budget estimates for FY2026-27 project Rs5.336 trillion in non-tax revenue, up from Rs5.093 trillion in the ongoing fiscal year.
Of total projected non-tax receipts, nearly Rs1.727 trillion is expected to come from petroleum-related charges, including the Petroleum Levy and the Climate Support Levy, underscoring the government’s increasing reliance on fuel taxes to bolster public finances while meeting IMF-backed fiscal reforms.
