ISLAMABAD: The government has decided to import 0.6 million metric tons (MMT) of sugar instead of the previous target of 0.5 million tons through the Trading Corporation of Pakistan (TCP) as strategic reserves.
The sources said that the government, while ratifying the ECC decisions titled “Importing Sugar for Strategic Reserves”, has decided that with the stipulation the ECC decision of January 20, 2021 will be amended to the extent where the total quantity of white sugar to be imported via TCP, if and when necessary, during the current season will be 600,000 MT instead of 500,000 MT. The sources said the federal government also excluded sugar from the Third Schedule of Sales Tax, 1990, aimed at reverting to the ex-factory price of November 30, 2020.
The Federal Board of Revenue (FBR) informed the Cabinet that prior to the 2021 finance law, sugar was subject to the standard rate of 17% and the price of domestically produced white crystalline sugar was set at Rs. 60 per kg under SRO 812 (1) / 2016. By the finance law of 2021, sugar was added to the third annex of the sales tax law of 1990 by inserting article n ° 50 of the third annex.
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Under this provision, a sales tax of 17% was payable on the retail price of sugar, except when it is supplied as an industrial raw material to the pharmaceutical, beverage and confectionery industries.
Data released by the Pakistan Bureau of Statistics showed that the price of sugar was on the rise after January 2021 and still shows an upward trend which is causing hardship for the general public.
The Prime Minister had taken note of the increase in the price of sugar and, in a meeting held on July 19, 2021, had indicated that the sales tax on sugar was to be reduced to the ex-factory price until November 30, 2021.
The amendment as proposed could be made by the federal government in the exercise of its powers under clause (a) of paragraph (2) of section 3 of the Sales Tax Act 1990 .
During the discussion, the Cabinet stressed the need to ensure that the benefit is passed on to consumers in the form of a lower price. The Minister of Industry and Production informed the cabinet that the sugar industry will be asked to ensure that the benefits are passed on to consumers.
Copyright Business Recorder, 2021