The government is considering imposing an 18 percent sales tax on packed milk, which will increase milk prices by up to Rs 40 per kg.
The government plans to raise an additional Rs 30 billion by imposing an 18 percent sales tax on packed milk, but Federal Finance Minister Ishaq Dar has expressed reservations over the proposal.
Sources said the FBR has proposed to end the zero-rating facility of the dairy sector, under which traders involved in milk production claim refunds.
The Finance Minister has also expressed reservations over the FBR proposal and it is most likely that both the proposals will be rejected. It may be noted that the packaged juice industry is already protesting against the imposition of 10 percent federal excise duty.
According to industry figures, the duty has had a negative impact on juice sales, with a 50% decline in juice production from mangoes and other fruits compared to last year.
Due to which the fruit pulping units operating in Punjab are facing the risk of closure.
It should be noted that the annual volume of the juice industry is Rs 60 billion and it provides employment to 5,000 people while the industry earns the government Rs 16 billion in revenue.
The imposition of federal excise duty will further exacerbate the already strained juice industry, which will result in a reduction in government revenue.