The government has proposed abolishing the Federal Excise Duty (FED) on sports and electrolyte replenishing beverages that meet World Health Organization (WHO) standards, according to the salient features of the Finance Bill 2026-27.
The proposed measure is part of the government’s broader effort to rationalise the tax structure and promote access to products that support hydration and nutritional recovery.
Officials said the relief would apply to beverages formulated to replenish electrolytes and fluids lost through physical activity, illness, or dehydration, provided they comply with internationally recognised WHO standards.
The move is expected to reduce the tax burden on manufacturers and importers of such products, potentially lowering retail prices for consumers.
Sports and electrolyte drinks are widely used by athletes, fitness enthusiasts, and individuals recovering from dehydration. Health experts often recommend electrolyte replenishment solutions in cases of excessive fluid loss caused by heat, exercise, or certain medical conditions.
Industry stakeholders have long argued that beverages serving a functional health purpose should be treated differently from conventional sugary drinks when it comes to taxation. The proposed removal of FED appears to reflect that distinction by providing relief specifically to products meeting prescribed health and nutritional standards.
The measure also aligns with broader efforts to encourage healthier beverage choices and improve access to hydration products, particularly during periods of extreme heat when dehydration-related illnesses tend to rise.
The proposal comes as part of a series of tax rationalisation measures included in Budget 2026-27, which seeks to balance revenue generation with targeted relief for selected sectors and products.
The abolition of FED on WHO-compliant sports and electrolyte replenishing beverages will take effect following parliamentary approval of the Finance Bill 2026-27 and its subsequent enactment into law.