The federal government has doubled the Climate Support Levy on petrol and high-speed diesel to Rs5 per litre, effective July 1, under the Finance Act 2026 and fiscal commitments linked to the IMF programme.

According to an official notification, the levy on both fuels has been raised from Rs2.50 per litre to Rs5 per litre.

To offset the increase, the government has reduced the Petroleum Levy on both products, ensuring there is no additional burden on consumers at the pump. The Petroleum Levy on petrol has been cut from Rs66.66 per litre to Rs64.14 per litre, while the levy on high-speed diesel has been reduced from Rs79.97 per litre to Rs70.04 per litre.

The adjustment effectively revises the overall tax structure on petroleum products, with part of the Petroleum Levy being replaced by the Climate Support Levy rather than imposing an entirely new charge on consumers.

The Climate Support Levy was introduced under the Finance Act 2026 as part of Pakistan’s broader fiscal reforms and climate financing strategy. The measure is intended to generate dedicated revenue for climate-related initiatives while aligning the country’s tax framework with reforms agreed under the IMF programme.

Despite the changes in the levy structure, retail prices of petrol and high-speed diesel remain unchanged, as the increase in the Climate Support Levy has been fully offset by the reduction in the Petroleum Levy.