ISLAMABAD: The federal government has decided to impose a carbon levy of Rs2.5 per liter on petroleum products in the upcoming fiscal budget for 2025-26.
Sources revealed that in the FY2026-27, the carbon levy will be increased to Rs5 per liter.
During the fiscal year 2025-26, the government is expected to generate up to Rs45 billion from the carbon levy, while by the fiscal year 2027, the income from the carbon levy will double.
The sources revealed that dudget negotiations between the economic team and the IMF have been completed.
The imposition of the carbon levy may lead to an increase in prices of the petroleum product in the country.
The carbon levy will be imposed on petrol and diesel alongside the petroleum development levy (PDL). However, kerosene and light diesel oil will not be subject to the carbon levy.
The government would not introduce a separate legislation for the imposition of carbon levy in the upcoming budget.
The government would use the revenue to be generated from Rs2.5 per liter carbon levy for green budgeting.
