Senate urges lower GST on formula milk for infant health

WEB DESK: The Federal Board of Revenue (FBR) has implemented an 18 per cent General Sales Tax (GST) on packaged food items, including formula milk, aligning with recommendations from the International Monetary Fund (IMF) aimed at bolstering tax revenues.

This decision was disclosed at a session of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla. The new GST framework will encompass all packaged goods retailed through departmental stores and larger retail outlets, exempting unpackaged food items typically sold in general stores.

Acknowledging the vital role of formula milk in infant nutrition, the committee advocated for a reduction in the GST rate specifically on formula milk, currently set at 18 per cent.

Chairman FBR conveyed to the committee the substantial revenue contribution from formula milk taxes and expressed openness to revisiting tax rates contingent on price adjustments by manufacturers.

In addition to tax policy, the committee addressed concerns over unregistered retailers selling formula milk and recommended their immediate exclusion from the retail network.

The imposition of the higher GST rate follows counsel from the IMF, which underscored the necessity of augmenting Pakistan’s tax base.

During recent negotiations for financial assistance, the IMF emphasized the challenges in Pakistan’s sales tax regime, where federal entities oversee taxes on goods while provincial bodies manage service-related taxes.

The deliberations highlight a contentious balancing act between fiscal reforms urged by international lenders and domestic imperatives aimed at safeguarding public health, particularly concerning infant nutrition.

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