Collection at manufacturing stage likely: Govt may scrap sugar FED in FY26 budget

ISLAMABAD: The government is likely to withdraw Rs 15 per kg Federal Excise Duty (FED) on sugar and replace it with the FED collection at the manufacturing stage of around 50 industries/sectors on a retail price basis.

Presently, FED of Rs 15 per kg is applicable on sugar supplied by any person to a manufacturing, or processing This levy is to the extent of supply of sugar for further use as a raw material and not for supply directly to ultimate consumers.

According to sources, the proposal is to end the Rs 15 per kg FED on sugar. Alternatively, it may be separately charged on the basis of printed retail price under Third Schedule of the Sales Tax Act to generate additional revenue. The manufacturer would be required to pay the due amount of FED on sugar after change in the FED regime on sugar.

Pakistan govt working on options to increase FED

Recently, the FBR has fixed the minimum ex-mill value of white crystalline sugar from April 1 for assessment of sales tax.

The SRO 577(I)/2025 has fixed minimum value inclusive of Sales Tax of domestically produced white crystalline sugar. The minimum value inclusive of sales tax would be average national retail price of refined sugar last published at Pakistan Bureau of Statistics (PBS) website (weekly sensitive price indicator - SPI) before 1st and 16th of every month minus sixteen rupees for respective fortnight starting on first and 16th of every month, the notification added.

Copyright Business Recorder, 2025