The Federal Board of Revenue (FBR) has imposed an 18 percent General Sales Tax (GST) on packaged food items, including formula milk.
The decision was announced during a meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla.
Chairman FBR, Amjad Zubair, told the committee that the GST will apply to all packaged items, including departmental stores and large retail outlets, but not to unpacked food items sold at general stores.
The committee recommended a reduction in the GST on formula milk from 18% considering its importance for infant health.
Chairman FBR informed the committee that the tax revenue from formula milk is significant, and the government is willing to consider a reduction in tax rates if the companies reduce their prices.
The committee also discussed the issue of unregistered outlets selling formula milk and recommended that such outlets be blacklisted.
It is pertinent to mention here International Monetary Fund (IMF) mission earlier ‘asked’ Pakistani authorities to increase general sales tax (GST) to 18 per cent.
The demand was put forward by the IMF during four round of talks with Pakistan authorities for a fresh loan.
IMF mission observed that the Pakistan’s sales tax collection system is facing problems as the centre is collecting sales tax on the commodities, while the provinces on the services.
They suggested sales tax collection should only be done by the federal government. The international lender also demanded to end GST exemption and increase it to 18 per cent on the commodities and service, the sources said.
