The Federal Board of Revenue (FBR) has clarified that petrol pumps operated by Oil Marketing Companies (OMCs) are not subject to the recently introduced 2.5% advance tax on sales to retailers.
What’s the Background?
The Finance Act 2024 initially included petrol pumps under Section 236H of the Income Tax Ordinance 2001, which imposed a 2.5% advance tax on sales to retailers across various sectors.
The Exemption:
The FBR has intervened, recognizing that OMC petrol pumps already operate under a different tax regime:
- Final Tax Regime: OMC outlets fall under this system, where tax is collected under Section 156A of the Income Tax Ordinance. This tax payment is considered a full and final discharge of their tax liability.
Rationale for Exemption:
- Price-Regulated Sector: The government regulates the dealer margin for OMC petrol pumps.
- Existing Tax System: The current tax system under Section 156A is already functional and efficient.
Impact:
This clarification ensures that OMC petrol pumps are not subjected to an additional tax burden through Section 236H. They will continue to operate under the existing Final Tax Regime.
