The prices of soft drinks are likely to be reduced due to the proposed up to 50 percent reduction in the federal excise duty (FED) on beverages in coming budget (2011-2012). Sources told Business Recorder here on Wednesday that the Finance Bill (2011-2012) is expected to reduce the rate of the FED on the beverages from 12 to 6 percent.
According to the FBR, budget proposal received in the Ministry of Finance, presently, aerated waters containing added sugar or other sweetening matter or flavour is subject to federal excise duty @ 12 percent of retail price. In order to rationalise the quantum of duty and taxes levied on beverage industry vis-à-vis its substitutes like fruit juices, food preparations, etc which are exempt from federal excise duty, it is proposed that the rate of federal excise duty levied on aerated water (beverages) may be reduced from 12 percent to 6 percent of the retail price. The FBR will suffer revenue loss to the tune of Rs 2 billion in 2011-2012 following reduction in the FED on beverages from 12 to 6 percent, sources added.