Government to Impose 18% Sales Tax on Milk

18% Sales Tax on Milk

The federal government has proposed an 18 percent sales tax on milk and fat-filled milk, which are currently zero-rated, in the new federal budget for 2024-25.

Details indicate that the government plans to tax infant milk items not exceeding Rs. 600 per 200g at the same 18 percent rate.

If approved, the total revenue impact is estimated to be around Rs. 95 billion (Rs. 75 billion from standard milk and Rs. 20 billion from infant milk).

During a post-budget briefing on Thursday, Finance Minister Muhammad Aurangzeb said that the middle class should not find it difficult to pay the 18 percent sales tax on milk products.

The expected revenue impact of Rs. 75 billion from the 18 percent tax on standard milk matches the budget allocated for parliamentarian schemes for the new fiscal year.

Currently, the price of milk is Rs. 290 per liter, but it is expected to rise to Rs. 342 per liter with the implementation of the 18 percent sales tax.