ISLAMABAD: The government revised the minimum base price of sugar for the purpose of sales tax collection, resulting in a price hike of Rs10 to Rs15 per kilogram and projecting an additional Rs90 billion in annual tax revenue.
The Federal Board of Revenue (FBR) issued a Statutory Regulatory Order (SRO) announcing the updated price mechanism. The previous base price of Rs 72 per kg has been scrapped, and the new minimum price for calculating 18% sales tax has been set at Rs126 per kg, effective until April 15.
Under the new system, the minimum value for sugar will now be updated every 15 days, linked to the average national retail price published by the Pakistan Bureau of Statistics (PBS) through its weekly Sensitive Price Indicator (SPI). The base price will be calculated by subtracting Rs 16 from the latest SPI retail price.
The most recently published PBS price was Rs168 per kg, which, under the new formula, sets the ex-factory price inclusive of sales tax at Rs152. This adjustment significantly increases the per kilogram sales tax to Rs 28, up from the Rs13–18 charged under the previous rate.
This new notification supersedes the earlier August 2021 order, which had fixed the sugar price for GST purposes at Rs72.22 per kg.
Despite the hike in the base price, Special Assistant to the Prime Minister on Industries, Haroon Akhtar Khan, downplayed concerns over a market price increase. He asserted that the new pricing formula would not impact consumer prices and was introduced with the consent of the Sugar Mills Association.
“This measure brings consistency in tax calculation and removes regional disparities in sugar pricing,” Khan said. “I don’t think it will affect the market rate of sugar.”
He also noted that sales tax was previously calculated based on the variable actual sale prices from mills across different regions and times.
An official of FBR revealed that Rs118 billion were collected in sugar-related sales tax last year using the old pricing range of Rs72 to Rs100 per kg. With the new pricing mechanism, the government expects total sales tax revenue from sugar to reach at least Rs208 billion in the current fiscal year.
