ISLAMABAD: The Federal Board of Revenue (FBR) is reviewing federal excise duty (FED) structure on juices and aerated water in the upcoming budget 2023-24.
Sources told Business Recorder that the budget exercise for 2023-24 is reviewing rates of the FED on excisable commodities and possible revenue impact on the packaged Juice industry.
Under the “mini-budget”, the government has imposed 10 percent excise duty on juices/squashes, raised 13 to 20 percent FED on aerated water.
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According to a presentation of the formal packaged Juice industry to Finance Minister Ishaq Dar with the implementation of 10 percent FED on juices in the Supplementary Budget of February 2023, industry sales in March and April have plunged by 45 percent. The sales of the formal packaged Juice industry had been projected to grow to more than Rs 70 billion.
However, now the sales are projected to be around Rs 43 billion. The decline in sales has led to the industry being unable to utilise its installed production capacity, with no new investment made or planned for 2023-2024. This shrinking business size will have an unfavorable impact on sales tax revenue and the overall allied industry, leading to unemployment while also negatively impacting fruit farmers linked with it.
In 2022, the industry procured an estimated 100,000 tons of mango from local farmers, apart from other fruits, for conversion into pulp. This year, the volume is projected to decline by about 50 percent.
The formal packaged Juice industry, by procuring fruits, timely and at a good rate, not just prevents significant food wastage but also protects the farmers’ livelihood.
The industry has also been helping farmers adopt best practices, which has resulted in the farmers’ uplift and development.
Fruit-based juices are promoted as a healthier option by Food authorities, especially for consumption in schools and colleges. In line with local regulations (such as Punjab Food Authority), fruit drinks have minimum 8% fruit content, nectars have 25-50 percent fruit content and pure juices have 100 percent fruit content.
The imposition of 10 percent FED is impacting affordability of the products produced by documented players, resulting in a large proportion of consumers shifting to low-priced, low-quality and possibly unsafe alternatives offered by the undocumented sector, which is almost 20 percent of the industry size.
Copyright Business Recorder, 2023
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