The federal government is preparing to double the carbon levy on petroleum products in the upcoming fiscal year, a move that could add further pressure on fuel consumers.

According to sources, the carbon levy is expected to increase from the current Rs2.50 per litre to Rs5 per litre under the FY2026-27 budget.

The revised levy will take effect from July 1, the start of the new fiscal year. Once implemented, the government will collect Rs5 per litre in carbon levy on petroleum products.

Sources said the current budget imposed a carbon levy of Rs2.50 per litre, while the broader fiscal plan had already envisioned raising the charge to Rs5 per litre.

The increase is expected to be included in the federal budget measures to be announced later this month.

A higher carbon levy could contribute to increased fuel costs, adding to the financial burden on consumers already facing elevated transportation and energy expenses.