Islamabad, April 8, 2025 — In a significant policy shift, the Federal Board of Revenue (FBR) has issued new criteria for the assessment of sales tax on sugar supplies across the country.
The move comes in response to ongoing fluctuations in market prices and aims to ensure a fairer and more transparent taxation mechanism for the sugar industry.
The FBR, through SRO 577(I)/2025 dated April 8, 2025, has laid out a revised formula for determining the value of domestically produced white crystalline sugar for sales tax purposes. According to the notification, the taxable value will now be based on the average national retail price of refined sugar, as published by the Pakistan Bureau of Statistics (PBS) on its Sensitive Price Indicator (SPI) before the 1st and 16th of each month. From this average price, a fixed amount of sixteen rupees will be subtracted to determine the taxable value for the respective fortnight.
This revised mechanism replaces the earlier fixed valuation method outlined in SRO 1027(I)/2021, dated August 16, 2021. Officials within the FBR stated that the older system of assigning a static value for sugar had become outdated, especially in light of recent volatility in sugar prices. The new approach, which links tax valuation to real-time market data, is expected to reduce discrepancies and improve revenue collection without overburdening stakeholders.
Sources at the FBR confirmed that sugar prices had been fluctuating significantly over the past few months due to a mix of supply chain issues, production costs, and seasonal demand. These variations prompted the FBR to revise its strategy, opting for a dynamic valuation model that more accurately reflects the actual market conditions of the sugar sector.
The FBR emphasized that this updated policy is designed to strike a balance between ensuring government revenue and addressing the concerns of sugar producers and traders. By aligning sales tax calculations with market realities, the FBR hopes to promote better compliance and greater transparency in sugar taxation.
The sugar industry, one of the key contributors to Pakistan’s agricultural economy, will now need to adjust its reporting and accounting processes in accordance with the new FBR guidelines.