FBR to impose 18% sales tax on packaged food items from July 2024

ISLAMABAD: Chairman of the Federal Board of Revenue (FBR), Amjad Zubair Towana, has announced that an 18% sales tax will be levied on processed and packaged flour, pulses, rice, sugar, and spices starting from the next financial year.

This decision was disclosed during a meeting of the Senate Standing Committee chaired by Saleem Mandvi Wali.

The session, which included notable participants such as Industry Representative Sheikh Waqar Ahmed, also considered a proposal to impose the same tax on locally produced baby milk. Sheikh Waqar emphasized the need for a gradual increase in the sales tax to avoid a sharp rise in baby milk prices.

Chairman FBR highlighted that milk companies have repeatedly raised their prices over the past two years, burdening consumers without contributing to the government’s revenue.

He noted that these companies have not entered the tax net despite substantial price hikes. Additionally, the complete abolition of zero rating from the next financial year was confirmed.

Zubair pointed out that imported milk is currently sold at twice the price of local milk and reiterated that the new 18% sales tax would be applicable to processed and packaged flour, pulses, rice, sugar, and spices. He challenged companies to reduce their prices by 18% if they wish to be exempted from the tax.

This move aims to increase government revenue and bring more businesses into the tax net, ensuring a fair contribution from all sectors.

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