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ISLAMABAD: To enhance sales volumes and revenue collection, the Federal Board of Revenue (FBR) has suggested lowering the Federal Excise Duty (FED) on beverages and tobacco as well as the withholding tax rates on real estate transactions.
An article states that while negotiations were ongoing, the government reviewed the suggested measures with the International Monetary Fund (IMF) mission. These steps are anticipated to generate an extra Rs90-100 billion in the fiscal year 2024-25’s April-June quarter.
According to the report, which cites FBR officials, the goal of lowering tax rates in these three areas is to encourage more economic activity. Reducing the federal excise tax on alcoholic beverages and tobacco products is anticipated to boost sales, while lowering the tax on real estate transactions could encourage more frequent purchases and sales, leading to an increase in tax income.
Nevertheless, the proposal still needs the green light from the government and the IMF, so no final decision has been made just yet.
In recent months, collection figures have fallen short of targets, leaving the FBR with a revenue gap of Rs600 billion. Because of the constraints on new taxing measures, policymakers are looking at ways to improve collection and encourage compliance without adding further burdens to current taxpayers.
Meanwhile, the Pakistan Dairy Association (PDA) has voiced significant resistance to the 18% General Sales Tax (GST) on packaged milk, therefore the government is now examining the matter. Rana Tanveer Hussain, minister of national food security and research, and members of the PDA met and discussed the matter.
Stakeholders in the dairy industry have voiced concerns that the Goods and Services Tax (GST) is driving up the price of packaged milk and deterring investment in the dairy industry.
While meeting with representatives from the dairy industry, Hussain recognized their struggles and emphasized the importance of legislative changes to bring the industry up to date. He pointed out that Pakistan produces more milk than any other country (more than 70 million tons per year), but that the country needs strategic investments to reach its maximum potential.
He stressed that bringing the dairy industry up to world standards would boost output, improve the quality of products, and make the sector more useful for ensuring food security.
Impact of GST on the Dairy Sector
The PDA delegation pleaded with the government to reevaluate the GST, saying that it is reducing investment in advanced dairy farming practices and impacting consumer affordability. They brought attention to the fact that, on top of already heavy tax loads, dairy farmers are facing rising feed and energy costs.
In order to investigate possible relief measures, Hussain promised the team that the Ministry of National Food Security and Research would meet with pertinent parties, such as the Ministry of Finance. He assured the public that the government will continue to back dairy farmers and guarantee a steady supply of premium dairy products.
