Govt raises minimum ex-mill sugar price for sales tax collection, targets Rs 90bn revenue boost
The federal government has raised the minimum ex-mill price of sugar to Rs153/kg for tax assessment, up from Rs72.22/kg. Effective April 1 via SRO 577(I)/2025, the move is expected to generate Rs90 billion in additional revenue, pushing total sugar-related tax collection to Rs208 billion. The revision aims to curb the fiscal deficit and standardize tax collection.
The federal government has revised the minimum ex-mill price of white crystalline sugar for sales tax assessment, which will increase the per kilogram price by Rs10 to Rs15. The change is expected to generate an additional Rs90 billion in tax revenue to address the government’s widening fiscal deficit.
According to media reports, the Federal Board of Revenue (FBR) issued a new statutory regulatory order (SRO 577(I)/2025) on Tuesday, setting the new minimum price for domestically produced sugar at Rs153 per kilogram, effective from April 1.
This move supersedes the previous notification (SRO 1027(I)/2021), which had fixed the ex-mill value of sugar at Rs72.22 per kilogram. The new price, which includes the 18% sales tax, will be reviewed every two weeks based on the national retail price published by the Pakistan Bureau of Statistics (PBS).
As per the new formula, the minimum price of sugar will be calculated by deducting Rs16 from the average national retail price of refined sugar, as reported on the PBS’s Sensitive Price Indicator (SPI) for the first and 16th of each month.
The FBR expects the new pricing structure to increase its sales tax revenue from sugar to at least Rs208 billion, up from Rs118 billion collected last year.
The government aims to tackle the ongoing revenue shortfall by boosting collections from sugar, an important industry in the country. Special Assistant to the Prime Minister on Industries, Haroon Akhtar Khan, emphasized that the new tax system would bring more uniformity and help streamline the tax collection process, as it was implemented with the consent of the sugar mills association.
Despite this, some mill owners have argued that the additional revenue would only amount to Rs15 to Rs20 billion, as many mills were already paying taxes based on a price of Rs100 per kilogram.
In addition to the sales tax, the government also collects a federal excise duty of Rs15 per kilogram on sugar supplied to manufacturers and commercial users, which has contributed Rs9 billion to government revenues in the first nine months of the current fiscal year.
To Read more about Sugar Industry continue reading Agriinsite.com
Source : Profit Pakistan Today
