KARACHI: Federal budget 2019-20 has proposed to increase sales tax on sugar to 17% from existing 8.0%.
Presently Sugar is subject to sales tax at 8%. This sector has huge economic potential but the tax collection from this sector is Rs 18 billion which is much lower than its actual potential. To minimize this tax gap and to harmonize its rate with other items, it is proposed that the sales tax rate on sugar may be enhanced to 17 %.
However, to provide partial relief to the consumer from this rate enhancement, it is proposed that the sugar may be excluded from the items on which further tax at 3% is payable if supplied to unregistered persons. The price increase as a result of this measure is expected at Rs. 3.60 per kg.