The government is considering a proposal to provide tax relief to Pakistan’s fruit juice industry by introducing either a zero percent or reduced Federal Excise Duty on a new category of juices containing no added sucrose or white sugar, ahead of the Federal Budget 2026-27.
According to sources, budget planners are actively reviewing the proposal, which seeks to create a separate tax category for healthier fruit juice products and distinguish them from carbonated beverages. Industry representatives argue that fruit juices should not be taxed in the same manner as soft drinks because of their role in supporting local agriculture and providing consumers with healthier beverage options.
The proposal has gained support from the Chairman Senate Standing Committee on Finance and Revenue Senator Saleem Mandviwalla, who has endorsed the industry’s recommendation to exempt the new sugar free juice category from the Federal Excise Duty. The industry has also requested a reduction in the FED on existing juice products from 20 percent to 10 percent in the upcoming budget.
Industry representatives claim the current tax structure has severely impacted business activity. They estimate that sales have declined by nearly 50 percent since the government imposed a 20 percent FED on fruit juices in the 2023-24 budget, in addition to the existing 18 percent sales tax. As a result, industry volumes have fallen to levels last seen in 2017, reversing years of growth.
The fruit juice sector, which recorded an annual turnover of approximately Rs. 40 billion in 2025, says the decline has affected the entire supply chain, including farmers and pulp processors.
Before the tax increase, the industry procured around 100,000 tonnes of locally grown mangoes, kinnows, apples and guavas annually for pulp production. Industry officials claim procurement volumes have since fallen by more than 50 percent compared to 2022 levels.
Manufacturers argue that the formal packaged juice industry is heavily localized and plays an important role in reducing food waste while supporting farm incomes. They also warn that higher taxes have encouraged consumers to shift toward lower-priced products sold by the undocumented sector, which they estimate accounts for nearly 20 percent of the market.
According to the industry, this trend has not only raised concerns about product quality and safety but has also reduced tax revenues for the government.
To address concerns over sugar consumption, the industry has proposed launching a new category of juices without added sucrose or white sugar. Companies say they are prepared to invest in the development of these products if the government provides a supportive tax framework. The proposed category would offer consumers an additional healthier beverage option while helping revive growth in the sector.
Officials familiar with the matter said the Finance Ministry’s Tax Policy Unit is currently reviewing the industry’s proposals. The final decision is expected to be taken during budget deliberations, with the outcome likely to have significant implications for fruit processors, farmers and beverage manufacturers across the country.
