ISLAMABAD: Federal Board of Revenue (FBR) has imposed 10 percent regulatory duty on the import of petrol while the regulatory duty shall not be levied on those cargoes for which Letter of Credits (LCs) had already been opened.
According to a notification issued by FBR, in exercise of the powers conferred by sub-section (3) of section 18 of the Customs Act, 1969 (IV of 1969), the Federal Government is pleased to levy regulatory duty at a rate of ten per cent on import of motor spirit (PCT code 2710.1210) with the stipulation that the regulatory duty shall not be levied on cargoes for which LCs had already been opened or were at high seas.
Similarly, the imports of motor spirit where customs duty at a rate of ten per cent is paid shall be exempted from the levy of regulatory duty. Furthermore, the notification shall remain in force till the 30th day of June, 2022, said FBR notification.
Earlier, it was brought into the government notice that no regulatory duty is imposed on the import of oil under the China-Pakistan Free Trade Agreement (FTA) and the oil marketing companies (OMCs) have been importing the petrol from China under the FTA and minting heavy benefit of over Rs22 billion in terms of tax exemption.
And, the federal cabinet while taking serious notice of this tax exemption has recently approved the imposition of 10% regulatory duty on the import of petrol from China and exempted the shipments that have already been booked for import.
As per details, following the increase in imports of petrol from China, the FBR had approached the Ministry of Commerce and the Ministry of Energy (Petroleum Division) and proposed imposition of regulatory duty where the customs duty was zero.
And, later the Ministry of Commerce submitted a summary titled “Levy of regulatory duty on import of motor spirit” before the federal cabinet’s economic coordination committee which after due deliberation approved the proposal of imposing 10% regulatory duty on motor spirit.
Earlier, the FBR pointed out before the commerce ministry that the import of motor spirit under HS Code 2710.1210 was subject to 10% customs duty under the Fifth Schedule of the Customs Act 1969, but it was subject to 0% duty under the China-Pakistan FTA. And, during the financial year 2021-22, the customs duty on motor spirit was increased from 5% to 10% on the recommendation of Petroleum Division.
It is pertinent to mention that due to the waiver from customs duty under the China-Pakistan FTA, in the current financial year, some of the OMCs had increase the import of petrol from China and their import of petrol from China increased from Rs30 billion in the previous financial year to Rs232 billion in the current year.