On Tuesday, April 8, 2025, Pakistan’s government raised the minimum sugar price to Rs26.22 for sales tax collection, which will increase sugar costs by Rs10-15 per kilogram while generating an extra Rs90 billion annually for the cash-strapped Federal Board of Revenue (FBR).
The FBR’s new statutory regulatory order (SRO) scraps the old Rs72.22/kg base price unchanged since August 2021 and sets a dynamic Rs126/kg starting point, effective April 1.
This new price, updated biweekly based on the Pakistan Bureau of Statistics (PBS) Sensitive Price Indicator (SPI), reflects a 75% jump from the prior rate. The fortnight ending April 15 is calculated from the latest PBS retail average of Rs168.80/kg, minus Rs16, yielding an ex-factory price of Rs152.80/kg with 18% sales tax. This shifts the tax per kilogram from Rs13-18 to Rs28, promising a revenue leap from Rs118 billion last year to Rs208 billion.
Read: Punjab Govt Delays Lead to Potential 40% Sugar Price Increase
The FBR found mills underpaying taxes by sticking to the outdated Rs72.22/kg rate, despite some voluntarily using Rs100-110/kg. Special Assistant to the PM Haroon Akhtar Khan insists retail prices won’t rise, arguing the SRO brings uniformity with sugar mills’ consent. However, mill owners dispute the Rs90 billion gain, estimating only Rs15-20 billion extra, as many already paid higher rates.
The FBR’s move tackles an Rs714 billion revenue shortfall this fiscal year despite an IMF-adjusted target drop from Rs12.97 trillion to Rs12.33 trillion. Sugar’s new tax base could add Rs23 billion by year-end, alongside Rs9 billion from a Rs15/kg excise duty. Yet, with retail sugar at Rs164/kg, 13% above export allowance rates, mills reap billions while consumers feel the pinch.
