The Federal Board of Revenue (FBR) has imposed an 18 percent General Sales Tax (GST) on packaged food items, including formula milk, as reported by Pakistan Talk Show.
This decision was announced during a Senate Standing Committee on Finance meeting, chaired by Senator Saleem Mandviwalla. FBR Chairman Amjad Zubair stated that the GST will be applied to all packaged items sold in departmental stores and large retail outlets but will not affect unpackaged food items sold at general stores.
The committee recommended a reduction in the GST on formula milk due to its critical importance for infant health. Chairman Zubair mentioned that the tax revenue from formula milk is substantial, and the government would consider lowering the tax rate if formula milk companies agreed to reduce their prices.
The committee also addressed the issue of unregistered outlets selling formula milk, recommending that these outlets be blacklisted to ensure compliance with tax regulations.
This move aligns with earlier demands from the International Monetary Fund (IMF), which asked Pakistani authorities to increase the general sales tax (GST) to 18 percent. The IMF’s request was part of negotiations for a new loan agreement, highlighting problems in Pakistan’s sales tax collection system, where the federal government collects tax on commodities and provinces collect tax on services.
The IMF suggested that the federal government should exclusively handle sales tax collection and recommended ending GST exemptions while raising the rate to 18 percent on both commodities and services .