ISLAMABAD: Federal Board of Revenue (FBR) official Amjad Zubair Tiwana announced to a Senate panel that an 18% general sales tax (GST) would be imposed on the processed and packaged sale of wheat, pulses, rice, sugar, and spices. This decision was shared during a meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla.
Tiwana clarified that no additional tax would be levied on unpackaged items, indicating a focus solely on processed and packaged goods. He also proposed reducing the existing 8% GST on formula milk.
He explained that an 18% GST has been imposed on locally processed milk, distinguishing it from formula milk used by economically disadvantaged mothers. He noted that expensive formula milk is not typically purchased by poor villagers, and the dealers and distributors of such milk are often unregistered.
Senator Farooq Naek suggested that companies evading taxes, particularly those selling formula milk, should be blacklisted. He highlighted that sales tax is an indirect tax ultimately borne by the consumer.
Mandviwalla pointed out that a significant number of women in the country rely on formula milk for their children. He criticized companies for consistently raising prices of packaged milk over the past 3-4 years and proposed that if these companies agree to lower prices, the tax on packaged milk could be reconsidered.
Tiwana concurred, stating that if the price of packaged milk is reduced in response to the 18% GST, for instance, if a Rs. 600 package is lowered accordingly, the FBR would consider adjusting the tax rate. The FBR will review the possibility of tax reduction in line with any decrease in milk prices.
This proposal aims to strike a balance between generating revenue through GST and addressing the financial burden on consumers, particularly those reliant on processed and packaged food items. The committee’s deliberations continue as they seek an equitable solution.
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