The Federal Board of Revenue (FBR) has introduced an 18 percent General Sales Tax (GST) on packaged food products, including formula milk. This move was disclosed during a session of the Senate Standing Committee on Finance, led by Senator Saleem Mandviwalla.
Chairman FBR, Amjad Zubair, stated that the new tax will apply to all packaged goods sold in departmental stores and large retail chains. However, unpackaged food items available at general stores will remain exempt from this GST.
The Senate Standing Committee on Finance suggested cutting the 18% GST on infant formula milk. During the recent meeting, the committee suggested to reduce the GST on infant formula milk.
Chairman FBR stated that the GST is imposed on locally processed milk.
He argued this formula milk is generally not used by poorer families. He added that many dealers and distributors of canned baby milk in Pakistan are unregistered.
Senator Farooq Naiq suggested blacklisting such a company over tax evasion. Furthermore, Senator Saleem Mandiwala stated that the majority of women in the country use formula milk for babies.
Chairman FBR stated that the canned milk manufacturing companies have been increasing prices for the last three to four years.
He added that if formula milk manufacturers reduce their prices, the FBR might consider lowering the GST accordingly. He proposed that a reduction in price by 18% could lead to a corresponding decrease in the tax, providing much-needed relief for consumers.
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