The Federal Board of Revenue (FBR) has announced that dealers and retail outlets of petrol pumps are exempt from the Advance Income Tax (AIT).
This decision comes amid an ongoing country-wide strike by petroleum dealers, who have been vehemently opposing the government’s decision to subject the sector to the collection of AIT from petrol pumps.
The Finance Act 2024 had expanded the scope of section 236H of the Income Tax Ordinance (ITO), allowing suppliers to deduct AIT from retailers at 0.5pc for filers and 1pc for non-filers. As a result, petroleum dealers were expected to face the same conditions.
However, the FBR has now clarified that the income of oil marketing companies (OMCs) distributors/retailers is subject to the final tax regime under section 169 of the ITO.
The dealers/retail outlets of OMCs have fully and finally discharged their tax liabilities, and the petroleum dealers will continue to be taxed at the existing mechanism under section 156A of the ITO.
The FBR’s decision is seen as a relief to the petroleum dealers, who had been protesting the imposition of AIT.
The strike had caused concerns about the supply of petroleum products in the country.
