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June 2024

Sugar, rice, flour, milk prices likely to ‘increase’ in budget 2024-25

According to recent details, the prices of essential commodities such as milk, tea, sugar, rice, flour, and packaged milk are likely to rise in the upcoming 2024-25 budget. This expected increase follows demands from the International Monetary Fund (IMF), which has urged Islamabad to further reduce sales tax exemptions in exchange for a fresh loan.

Sources indicate that the IMF has recommended imposing a 5-10% sales tax on sectors currently enjoying zero-rated sales tax status. Additionally, there is significant pressure to eliminate tax exemptions in the Federally Administered Tribal Areas (FATA) and the Provincially Administered Tribal Areas (PATA) by June 30.

The budget proposals for the fiscal year 2024-25 suggest that Pakistan may remove existing exemptions on sales and income tax. The government is also contemplating the imposition of a sales tax on tractors and pesticides. Such measures could result in price increases for these crucial agricultural products.

At present, under the Sixth Schedule of the Sales Tax Act, pesticides and their active ingredients registered by the Department of Plant Protection are exempt from sales tax. Removing these exemptions would likely impact the agricultural sector significantly.

Earlier this week, the IMF issued an official statement following its discussions with Pakistani officials. The statement confirmed that Islamabad has formally requested a new loan program from the IMF, reflecting the country’s ongoing efforts to stabilize its economy amid fiscal challenges. QR Code

Published Date: May 30, 2024

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