Petrol Pumps Exempt from New 2.5% Advance Tax for Retailers

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.


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.

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