Consumers may soon pay Rs. 10-15 more per kilogram for ghee and cooking oil after the government introduced a new sales tax collection mechanism in the federal budget, according to industry representatives.
Pakistan Vanaspati Manufacturers Association Chairman Sheikh Umer Rehan said on Wednesday that the budget has expanded the scope of the Third Schedule by shifting sales tax collection on ghee and cooking oil to a mechanism based on the Maximum Retail Price.
He said the change would significantly increase the tax burden on manufacturers and eventually be passed on to consumers.
Rehan said the edible oil and ghee industry is already operating under a heavy tax burden and had urged the government to provide relief in the budget to ease pressure on consumers.
Instead, he said, the latest fiscal measures have further increased taxes on the sector and are likely to raise retail prices.
The Third Schedule mechanism requires sales tax to be charged on the printed retail price of products rather than the ex-factory price, resulting in higher tax collection and potentially higher consumer prices.
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