FBR Imposes Rs80 FED On Three Petroleum Products

The Federal Board of Revenue (FBR) has introduced a Federal Excise Duty (FED) of Rs80 per litre on three petroleum-related products with effect from July 1, 2026, under amendments made through the Finance Act 2026.

The duty has been imposed on petroleum top naphtha, white spirit or mineral turpentine oil (MTT), and solvent oil. These products are not currently subject to the petroleum development levy (PDL).

The move is intended to prevent the misuse of these products in the adulteration of petroleum products on which PDL is charged.

Under the revised arrangement, the Rs80-per-litre FED will be collected through the sales tax mechanism. This will allow registered taxpayers to adjust the duty against their output sales tax, subject to the applicable rules.

The change has been incorporated into the Federal Excise Act, 2005, with the three products added to the relevant schedules governing the imposition and adjustment of federal excise duty.

The government has also provided conditional relief for industries that use the affected petroleum products as manufacturing inputs.

An exemption or exclusion may be available when the finished product is exempt from sales tax or when both the supplier and manufacturer are integrated with the FBR’s digital invoicing system. Such relief will remain subject to the prescribed conditions.

Separately, sales tax concessions have been granted on certain machinery, equipment and other items required for refinery upgrades, scheduled shutdowns, maintenance and overhaul activities.

The measure is designed to support refinery modernisation and help local refineries meet cleaner-fuel and environmental requirements, including stronger emissions controls and lower carbon and sulphur intensity.