Sugar Price is being increased as a consequence of withdrawal of 50 Per Cent Concession on Sales Tax on Sugar

Sugar Price is being increased as a consequence of withdrawal of 50 Per Cent Concession on Sales Tax on Sugar

Islamabad: As regards the newspaper reports of allegation about ‘tax’ imposition leading to increase in price it is incorrect. It is clarified that:

a) There are two concessions on white sugar. Firstly the assessed sugar price per kg was fixed at Rs.28.88/kg. Secondly sales tax levied was 8% of this fixed assessable value.

b) In March 2011 the assessable value was taken as the ‘market value’ while the sales tax was still 8% or 50% the sales tax (16%) levied on other items. An amount of Rs. 6.30/kg (Sales tax 8% at market value and Special Excise Duty @ 2.5%) was already added to the retail market price at that time.

c) Now, Sugar has been exempted from sales tax through Finance Act 2011 while 8% Federal Excise duty (FED) has been imposed. Moreover 2.5% Special Excise Duty (SED) has also been abolished as for all other items.

d) As such if ex-mill price is taken as Rs. 60/kg then the 8% FED will be Rs. 4.80/kg.

e) Therefore any increase in price is unwarranted since the net effect is a reduction in tax. Sugar price should in fact be reduced from the March 2011 level to the tune of Rs. 1.50/kg approx. since SED has now been abolished.

For more information, contact:
Haji Ahmed Malik
Principal Information Officer
Press Information Department (PID)
Tel: +9251 925 2323 and +9251 925 2324
Fax: +9251 925 2325 and +9251 925 2326
Email: piopid@gmail.com

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