High-potential consumer items: Pakistan govt mulling imposing FED

ISLAMABAD: The government is reviewing additional revenue generation measure to impose Federal Excise Duty (FED) on high-potential consumer items including confectionery products (cakes/sweets), sauces, biscuits and other confectionery items.

According to industry estimates, a wide range of packaged consumer goods is expected to contribute approximately Rs 150 billion in incremental taxes through the proposed imposition of FED and additional sales tax measures in budget (2025-26). These categories include widely consumed items such as confectionary, sauces, dips, biscuits, flavoured milk, ice cream, cereals, and syrups.

The confectionery (cakes and sweets/mithai) category, which has a high growth rate across the Punjab province and a market size of Rs 201 billion, is expected to yield Rs 47.4 billion, including Rs 40.2 billion in FED and Rs 7.2 billion under sales tax.

Pakistan govt working on options to increase FED

Similarly, the chips category, with a market size of Rs 96 billion, is projected to contribute Rs 22.4 billion in incremental taxes, consisting of Rs 19.0 billion in FED and Rs 3.4 billion in Sales Tax. The biscuit category, with a market size of Rs 206 billion, is projected to generate Rs 48.6 billion in taxes, comprising Rs 41.1 billion in FED (at 20%) and Rs 7.4 billion in Sales Tax.

This approach, targeting discretionary and processed consumer categories, offers a practical solution to boost revenues without overburdening lower-income households. By carefully calibrating tax rates and applying them to these products,

The government can strike a balance between fiscal consolidation and consumer impact.

Through this strategy, the government can ensure that the policy remains both effective and equitable, aligning with the broader goals of fiscal responsibility and economic growth in the upcoming budget cycle.

Moreover, shifting a portion of the tax burden to currently untaxed but high-consumption categories can offer much-needed relief to already heavily taxed industries. This rebalancing may not only support business sustainability but also stimulate broader economic activity, ultimately leading to a more diversified and resilient revenue base for the government, they added.

Copyright Business Recorder, 2025