Increase in duty/taxes: Ghee and oil prices may shoot up by Rs 18-20 per kg/litre: PVMA

The Pakistan Vanaspati Manufacturers Association (PVMA) drawing the attention of the government towards increase in duty/taxes suggested in Finance Act 2019-20 has claimed that it may increase the prices of ghee and cooking oil by minimum Rs 18-20 per kilogram/liter.
PVMA Chairman Tariq Ullah Sufi in a letter to Minister for State for Revenue Muhammad Hammad Azhar said that different government representatives had announced (even on the floor of House) that no additional duty/tax will be imposed in the Finance Act 2019-20 on edible oils.
He said the assurance of not adding any supplementary tax burden on industry was also conveyed to PVMA delegation in a meeting with the minister and his team members. "Considering your promise, the industry completely abstained from airing its concern through any mean of media and continued with its business as usual of imports-cum-manufacturing and unhindered supply of ghee and cooking oil in market to meet the consumer demand."
The letter said it was indeed shocking to learn that contrary to 'government statements' with respect to budgetary measures, the duty/taxes on industrial raw material and finished products have been increased substantially.
Highlighting the details, Tariq Sufi pointed out that the rate of additional custom duty enhanced from previous 2% to revised 7% ie. an increase of 5% vide Customs SRO 670 (I)/2019 dated 28th June 2019. The financial impact of this increase translates into minimum increase of Rs 5-6/kg or liter of Banaspati/Cooking Oil.
Replacement of fixed rate of FED at Re 1/kg as final liability of value addition with normal VAT regime is now applicable to Banaspati & cooking Oil causing an increase in price for consumers by Rs 8-10/Kg.
Similarly rate of FED applicable vide First Schedule read with Section 3 of Federal Excise Act, 2005 enhanced by 1% ie. from 16% to 17% creating another huge impact.
Levy of Income Tax (WHT) on supply of goods to whole sellers/distributors @ 0.3% on gross value of goods. The levy of additional duty/tax on inputs other then edible oil and services including sales tax on services by Provincial Revenue Authorities is likely to cross Rs 4-5/kg.
The PVMA Chairman maintained that in view of above, it is for sure that price of Banaspati and cooking Oil will experience a cumulative jump of Rs 18-20/kg for end consumers due to changes incorporated through Finance Act 2019-20.
The industry has a workable comprehensive plan to augment the efforts/charter of FBR in enhancing the tax base and documentation of economy, without disrupting the industrial production and supply chain mechanism, the letter said and added that the PVMA strongly recommends that above-mentioned harsh taxation measures should be withdrawn forthwith, since ghee and cooking oil are included in the list of staple food items largely consumed by low income and various social segments. He also claimed that on the very first day of fiscal year 2019-20, the supplies to market could not materialize due to anomalies in applicable tax regime rejected by distribution network, which obviously remains out of control or ambit of Industry.