ISLAMABAD: The Ministry of Commerce (MoC) has asked the Pakistan Dairy Association (PDA) to submit a proposal for reducing General Sales Tax (GST) on dairy products from 18 percent to 10 percent, along with initiating a pilot project for formalising the dairy sector in Islamabad and Lahore.
The issues confronting the dairy sector were discussed in detail during a meeting chaired by Federal Minister for Commerce Jam Kamal Khan. The PDA delegation was led by its CEO, Dr Shehzad Amin.
The meeting was also attended virtually by Rana Ihsaan Afzal, Coordinator to the Prime Minister on Commerce, along with senior officials of the Ministry of Commerce.
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Discussions focused on key challenges facing Pakistan’s dairy sector, particularly taxation, tariff structures, low productivity, and the need for improved genetic quality of livestock, as well as formalisation of the largely undocumented sector.
The Commerce minister emphasised that enhancing the genetic quality of dairy breeds and guiding farmers toward a formalised business model are critical for sustainable growth.
He noted that without proper genetic direction, farmers cannot achieve optimal milk yields, underscoring the need for structured support, effective regulation, and farmer education.
The PDA highlighted that the current GST rate of 18 percent on dairy products is significantly higher than global and regional benchmarks, where such products are often either zero-rated or subject to minimal taxation.
In response, the Minister directed the Association to prepare a comprehensive proposal to reduce GST to 10 percent and tasked Rana Ihsaan Afzal with leading coordination efforts with stakeholders to finalise recommendations.
He further stated that he would write to provincial chief ministers and relevant ministries to ensure coordinated efforts for implementing reforms and promoting formalisation of the dairy sector nationwide.
The Association also proposed financial support mechanisms and improved banking access for farmers, enforcement of regulations to ensure the sale of only pasteurised and properly packaged milk, and the launch of pilot projects in major urban centers to transition farmers into formal business practices.
Copyright Business Recorder, 2026
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