Govt 'considers' excise duty on sugar to bridge tax shortfall

ISLAMABAD: The Pakistan government is ‘considering’ to impose Federal Excise Duty (FED) on sugar to address the ongoing tax shortfall, ARY News reported on Thursday, quoting sources.

The Federal Board of Revenue (FBR) is to face a revenue shortfall of over Rs 50 billion in the ongoing month of January 2025.

As per details, the government is reportedly considering FED on the sugar to minimise the tax shortfall ahead of IMF review for the second tranche of the ongoing loan programme.

Proposals to levy FED per kilogram of sugar have been forwarded to PM Shehbaz Sharif for approval, alongside suggestions to revise the current sales tax mechanism on sugar.

The proposals have been drafted by Minister of State for Finance, the Chairman of the Federal Board of Revenue (FBR), and the Secretary of the Ministry of Finance.

Sources indicate that under the proposed amendments to tax laws, a fixed sales tax regime could be introduced, ensuring a more structured collection process.

Read more: FBR to face Rs50 billion revenue shortfall in January

The initial recommendation suggests an excise duty ranging from Rs3 to Rs4 per kilogram, which would directly impact consumers.

If implemented, the FED would lead to an increase in the retail price of sugar, directly affecting ordinary consumers. However, the final decision on these tax measures rests with the Prime Minister’s Office, which is yet to give its approval.

Denying reports of an immediate imposition, Minister of State for Finance Ali Pervaiz clarified that while FED and sales tax revisions are under consideration, no final decision has been made yet.