Authority to collect petroleum levy given to FBR, new system implemented

The Federal Government has empowered the FBR to collect the Petroleum Development Levy and Climate Support Levy on petroleum products. Now, the FBR will collect these levies as the agent of the Ministry of Petroleum and the Petroleum Division. For this purpose, the FBR has amended the Sales Tax Rules 2006 vide SRO 800(I)/2026 and changes have also been made in the Sales Tax Return Form STR-7.

Under the new system, all registered petrol pumps will have to provide complete details of the purchase of petroleum products including the buyer’s NTN number, CNIC number, name, nature of purchase, HS code, date, quantity sold in liters, value of sale and levy rate and amount collected. If a buyer is exempted from PDL or zero-rated, it will also be mandatory to quote the relevant SRO and schedule.

The Climate Support Levy was introduced through the Finance Bill 2025 and came into effect from July 1, 2025. Its aim is to mobilize financial resources to address environmental and climate challenges. FBR officials say that there will be no change in the tax collection areas, but only the collection mechanism has been changed and now the FBR will act as a collection agent on behalf of the concerned ministry.