The Federal Board of Revenue (FBR) has tied a proposed tax reduction for the packaged juice industry to the submission of post-dated cheques, sparking concern among manufacturers over the feasibility of such a condition.
During a recent meeting with industry representatives, the FBR proposed reducing the Federal Excise Duty (FED) on packaged juices from 20 percent to 15 percent in the upcoming 2025–26 federal budget. However, this relief would only be granted if the industry provides post-dated cheques covering the projected tax revenue for the next fiscal year.
FBR Chairman Rashid Mahmood Langrial defended the proposal, stating that it offers a safeguard to ensure revenue targets are met if the tax cut fails to deliver the promised increase in sales volume. He argued that if the industry believes a lower tax will lead to higher consumption and ultimately boost tax receipts, it should have no objection to backing that projection with financial guarantees.
Industry leaders, however, expressed strong reservations. Representatives from the Fruit Juice Council questioned the practicality of issuing cheques for future sales that are yet to materialize. They highlighted the difficulty of forecasting revenue in an already struggling market environment.
Since the imposition of 20 percent FED and 18 percent General Sales Tax (GST) in the 2023–24 budget, the packaged juice sector has reported a sharp 45 percent decline in sales. The downturn has affected the entire supply chain, curbing new investments, lowering production capacity, and reducing fruit procurement levels to a seven-year low. For instance, mango purchases fell to 20,233 tons in the last year, compared to 31,000 tons in 2017–18.
With taxes now comprising up to 42 percent of the consumer price of juice products, many buyers have shifted to cheaper, unregulated alternatives. The undocumented sector, which faces little oversight or taxation, now claims over 25 percent of the market, raising health and safety concerns.
The Fruit Juice Council reiterated its demand for a reduction in FED to 15 percent, stressing the industry’s potential to contribute to the formal economy and expand into export markets. Industry leaders warned that without meaningful tax relief, further contraction in the sector could result in job losses and continued erosion of the formal market share.
As the budget deadline approaches, it remains to be seen whether the government will revise its stance or maintain the requirement for post-dated cheques as a condition for tax relief.
