Budget 2026-27 aims to exclude low-sugar hydration beverages from the 20% Federal Excise Duty.
The federal government has proposed a significant tax relief measure in the Pakistan Budget 2026-27 by excluding hydration drinks and electrolyte beverages from the imposition of Federal Excise Duty (FED).
The move is aimed at encouraging healthier beverage options while refining the country’s taxation framework for sugary products.
Under the proposed budgetary changes, hydration beverages and sports drinks that comply with international health standards, including those aligned with World Health Organization (WHO) guidelines, would no longer be subject to the existing 20 percent FED charged on retail prices.
Previously, sugary fruit juices, syrups, squashes, and certain water-based beverages were brought under the ambit of a 20 percent Federal Excise Duty. However, mineral water and aerated water had already been exempted from this levy.
The latest proposal seeks to expand these exemptions to include specific hydration products that meet defined nutritional standards.
According to the proposed amendments in the Finance Bill, hydration drinks or electrolyte beverages designed to support body hydration and replenish essential minerals would qualify for the exemption.
However, only products containing no more than 5 grams of sugar per 100 milliliters and free from artificial sweeteners would be eligible.
The government’s initiative appears to align with broader public health objectives by promoting beverages with lower sugar content.
Industry experts believe that such measures could encourage manufacturers to reformulate products and introduce healthier alternatives for consumers.
If approved by parliament, the exemption could provide relief to beverage manufacturers and consumers alike while supporting efforts to reduce excessive sugar consumption.
The proposal also reflects the government’s strategy to distinguish between high-sugar drinks and healthier hydration products through targeted taxation policies.
The final implementation of the proposed tax changes will depend on parliamentary approval during the budget process for the fiscal year 2026-27.
