The Federal Board of Revenue (FBR) has announced sweeping tax exemptions and concessions on the import of 0.5 million metric tons (MMT) of white crystalline sugar. This significant relief package is a direct response to a Cabinet Division directive, aimed at stabilizing domestic supply and curbing the rising prices of sugar in the market, especially ahead of the peak consumption season.
To facilitate this crucial import, the FBR has issued three separate Statutory Regulatory Orders (SROs): SRO 1215(I)/2025, SRO 1216(I)/2025, and SRO 1217(I)/2025.
Comprehensive Tax Relief Measures:
- Customs Duty Exemption (SRO 1215(I)/2025):
The FBR has granted a full exemption from customs duties on the import of up to 0.5 MMT of sugar. This exemption is applicable to imports carried out by both the Trading Corporation of Pakistan (TCP) and the private sector. However, importers must strictly adhere to the quotas, conditions, and quality control measures established by the Commerce Division. All eligible imports must be completed by the cut-off date of September 30, 2025.
- Reduced Withholding Income Tax (SRO 1216(I)/2025):
To further ease the financial burden on importers, the withholding income tax under Section 148 of the Income Tax Ordinance has been significantly reduced. For eligible sugar imports, this tax will now be collected at a minimal rate of just 0.25% of the declared value. This concession also applies to both TCP and private importers within the specified time and quota limits.
- Sales Tax Reduction and Waiver (SRO 1217(I)/2025):
Perhaps one of the most substantial reliefs comes in the form of a drastic reduction in sales tax. The sales tax on the import and subsequent supply of white crystalline sugar has been slashed from the standard 18% to a mere 0.25%. Additionally, the FBR has completely waived the 3% minimum value addition tax that was previously applicable under the Twelfth Schedule of the Sales Tax Act, 1990.
Quality Control and Oversight:
To ensure the quality and consistency of imported sugar, the FBR has mandated that all imports must be certified for quality by an international inspection firm, operating under the direct supervision of the Commerce Division. This requirement aims to maintain transparency and uphold standards across all import operations.
With the issuance of these SROs, the FBR has demonstrated a proactive and responsive stance in utilizing fiscal policy to manage domestic sugar supply. By providing significant tax relief and implementing necessary regulatory controls, the government aims to alleviate inflationary pressures on consumers while maintaining strict oversight on the sugar import operations. This move is expected to help stabilize sugar prices and ensure adequate availability in the market.
