Oil Industry Proposes Budget Measures for FY 2025-26

* The projected impact for FY 2025 exceeds Rs18 billion.
* The industry advocates for a reduction in the minimum tax on Refineries and OMCs to 0.25%.
* OCAC is pushing for the restoration of the Commissioner’s authority to issue exemption certificates.

The oil industry has presented its budget recommendations for the fiscal year 2025–26, urging the Federal Board of Revenue (FBR) to eliminate the super tax and withdraw the sales tax exemption and final tax system on exports of petroleum products.

In a letter to the FBR chairman on April 7, 2025, the Oil Companies Advisory Council (OCAC) requested the removal of the sales tax exemption introduced under the Finance Act 2024. This exemption currently applies to Motor Spirit (petrol), High-Speed Diesel, Kerosene, and Light Diesel Oil.

The OCAC contended that the disallowance of input tax has increased operational expenses and hindered the industry’s infrastructure development due to regulated petroleum pricing.

With an anticipated impact of over Rs18 billion for FY 2025, the OCAC suggests that petroleum products should be taxable.

Regarding the super tax, the OCAC called for its abolishment, noting that it was initially introduced as a one-time levy but has since been extended beyond its original intention.

Given the current economic situation and the necessity to support documented and responsible businesses, the OCAC strongly advises abolishing the Super Tax for the tax year 2025-26.

Additionally, the OCAC proposed reducing the Minimum Tax applicable on Refineries and OMCs to 0.25% and eliminating it in the following year.

The Oil Companies Advisory Council is also seeking to reinstate the Commissioner’s authority to issue Exemption Certificates.