Karachi, December 2, 2024 – The Karachi Chamber of Commerce and Industry (KCCI) has urged the authorities to remove the Minimum Retail Price (MRP) regulation from the tax valuation of tea. In a statement issued on Monday, KCCI President Muhammad Jawed Bilwani expressed strong opposition to the recent decision by the Federal Board of Revenue (FBR) to set the MRP of Rs1200 per kg on the import of black tea in bulk, which is then subject to sales tax and withholding tax.
Bilwani’s remarks came in response to concerns raised by the Pakistan Tea Association (PTA), which believes that the MRP fixation would harm legitimate tea importers and further exacerbate the financial strain on lower-income households in Pakistan. The KCCI president emphasized that this regulation would not only force importers to pay higher taxes but would also push up the prices of tea, making it unaffordable, particularly for economically disadvantaged segments of society.
“The imposition of a flat MRP per kilogram will disproportionately affect the lower-income groups, particularly in urban and rural areas,” Bilwani explained. “This policy places an additional financial burden on households already struggling with inflation and the rising cost of essential goods.”
Bilwani made these statements during a meeting with the PTA delegation at the KCCI, which included PTA Chairman Muhammad Altaf, KCCI Vice President Faisal Khalil Ahmed, Chairman of KCCI’s Federal Taxation Subcommittee Abu Bakar Shamsi, and several other key stakeholders from both KCCI and PTA.
Bilwani proposed that instead of a uniform MRP, a more nuanced approach should be adopted. He pointed out that black tea is imported at prices ranging from $0.80 to $4.5 per kg, yet the MRP regulation would force all tea, regardless of cost, to be taxed as though it were Rs1200 per kg, significantly inflating the cost for consumers. This would make even the least expensive tea unaffordable for the masses, he said.
Further, Bilwani raised concerns about the exemptions given to areas like FATA and PATA, highlighting that these regions accounted for 23 million kilograms of tea in 2023-24. While this tea was exempt from taxes, much of it ended up being sold in other parts of Pakistan, depriving the national exchequer of an estimated Rs25 billion annually.
PTA Chairman Muhammad Altaf echoed KCCI’s concerns, stating that the MRP fixation ignores the nature of tea trade, where tea is imported in bulk, processed, and then sold. He urged that the sales tax be applied based on the import value, as specified under the Sales Tax Act, rather than a fixed MRP, which could increase tea prices by Rs150 to Rs300 per kg.
Altaf warned that if this policy continued, it would lead to substantial revenue losses, not only for tea traders but for the national economy as well. He called on KCCI to support their efforts in addressing the issue. The KCCI has promised to work closely with PTA to seek a resolution and ensure that Pakistan’s tea industry remains competitive while protecting consumers from unjust tax policies.
