Petroleum Products (Petroleum Levy) and Climate Support Levy Ordinance, 1961

This Ordinance gives the Federal Government legal authority to levy and collect a Petroleum Levy, and, following recent amendment, a Climate Support Levy, on petroleum products such as motor spirit (petrol), high speed diesel, furnace oil, kerosene, and other products listed in the First Schedule. Section 3 requires every company, refinery, and licensee to pay both levies at rates the Federal Government notifies in the official Gazette from time to time; unpaid amounts are recoverable as an arrear of land revenue.

Section 3(4), added by the Finance Act, 2025, sets out specific Climate Support Levy rates: two rupees and fifty paisa per litre on Motor Spirit and High Speed Diesel for financial year 2025-26, rising to five rupees per litre for 2026-27, with the same per-litre rates (equivalent to Rs. 2,665 per metric tonne in 2025-26) applying to Furnace Oil - all in addition to the separately notified Petroleum Levy.

Section 4 bars a company from selling petroleum products above a Federal-Government-fixed "maximum sale price," treating a breach as a violation of the Price Control and Prevention of Profiteering and Hoarding Act, 1977. Section 5 lets companies treat the levy paid as a deductible expense for income tax purposes. Section 3A allows the Federal Government to exempt companies from the levy, or authorise refunds, in specified cases, and levy on imports is collected the same way as customs duty while levy on domestically produced petroleum is collected the same way as federal excise duty. Sections 6 to 8 give the Federal Government rule-making and delegation powers, and Section 9 validates levy collected during a specific 2010-2011 period so it cannot be refunded or challenged.

This is an old Ordinance (1961) that has been amended repeatedly, most recently by the Finance Act, 2025. The Climate Support Levy rates quoted above are the only current figures in the extract; because petroleum levy rates are set separately by Gazette notification and change often, readers should check the latest official notification for the actual amount currently charged.