Islamabad, June 27, 2025 – The Federal Board of Revenue (FBR) has issued a new directive significantly altering how the minimum retail price of cement will be determined for sales tax purposes.
This move is expected to impact tax calculations across the construction and manufacturing sectors, which heavily rely on cement.
According to the new notification, SRO 1126(I)/2025 issued by the FBR on June 27, 2025, the revised method calculates the monthly minimum retail price of cement by averaging the prices in key urban centers—Karachi, Lahore, Faisalabad, and Peshawar. Additionally, it includes the average prices of Rawalpindi and Islamabad, as published by the Pakistan Bureau of Statistics (PBS). A fixed reduction of Rs25 will then be applied to this average to arrive at the base price for sales tax assessment.
This change in the pricing formula replaces the earlier method laid out in SRO 746(I)/2025 dated April 29, 2025. Under that rule, the FBR had based the minimum retail price of cement on the national average retail price as published in the PBS’s weekly Sensitive Price Index (SPI), taken twice a month—before the 1st and 16th. That average served as the sales tax benchmark for each fortnight.
The FBR’s latest revision aims to provide a more regionally accurate and stable reference for cement prices, rather than relying on national averages that may fluctuate due to temporary market variations or spikes in individual regions.
Industry experts believe the updated methodology will improve compliance and reduce disputes over tax calculations. However, some cement manufacturers and retailers may see a difference in their payable taxes based on how their local retail prices compare to the new average-based rate.
The FBR continues to fine-tune its tax policies in high-revenue sectors, with cement being a significant contributor to the national exchequer. Stakeholders in the cement supply chain, especially dealers and retailers, are advised to stay informed of the latest changes and adjust their pricing and documentation accordingly to remain compliant with the revised sales tax framework.