Consumers may face higher fuel prices from July 1, 2026, as the federal government is considering a proposal to double the carbon levy on petroleum products under the upcoming FY2026-27 budget.
According to sources involved in the budget-making process, the government plans to increase the carbon levy from Rs. 2.50 per litre to Rs. 5 per litre, effectively doubling the charge currently imposed on petrol and other petroleum products.
The proposed increase is expected to take effect at the start of the new fiscal year and will form part of broader revenue-generation and climate-related policy measures included in the federal budget.
Officials familiar with the proposal said the current fiscal year’s budget had already provided for a carbon levy of up to Rs. 5 per litre. The government is now preparing to implement the full levy amount in FY2026-27.
If approved, the higher levy could contribute to an increase in fuel prices for consumers, depending on international oil prices, exchange rate movements, and other taxation measures announced in the budget.
The government is expected to formally unveil the proposal during the presentation of the Federal Budget 2026-27. The measure is aimed at boosting revenue collection while supporting environmental and climate policy commitments.
Analysts note that any increase in petroleum-related taxes and levies can have a wider impact on transportation costs, inflation, and household expenses, making fuel pricing one of the most closely watched aspects of the annual budget.
