The Karachi Chamber of Commerce and Industry (KCCI) has suggested that the rate of Federal Excise Duty (FED) for beverage concentrate and beverages should be reduced by 25 percent and 6 percent respectively as beverages are not luxurious items anymore and rates should be rationalised. Currently, concentrate is chargeable to FED at the rate of 50 percent, whereas beverages are charged to FED at 9 percent on retail price.
Beverages are also subject to General Sales Tax on retail price. Reduced FED would give some relief to the manufacturers from excessive burden of taxes and would reduce extra cost of production of beverages. The chamber further suggested to reduce customs duty on finished soap by 15 percent and to remove 5 percent regulatory duty.
Current duty structure on finished soap H S Code 3401.1100 is 25 percent, R D is 5 percent, while sales tax is 17 percent, along with 6 percent income tax, additional sales tax is 3 percent while other miscellaneous expenses come to over 6 percent. High rates of duty and taxes have drastically increased the cost of soap imported through legal channels. Consequently the smuggling of foreign soap has been increased. The numbers of brands are available in domestic markets which are not visible in import data. Reduction of custom duty on soap and removal 5 percent regulatory duty will discourage smuggling of finished soap.