PDA says reducing tax on packaged milk to 5pc could cut retail price by Rs50 per litre

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LAHORE: The Pakistan Dairy Association (PDA) on Wednesday said that if the government reduces the current 18 % sales tax by 5.0 %, the price of packaged milk can be reduced by Rs 50, which will also encourage investment in formal milk sector.

The government removed the zero rating rule for both liquid and powder under the Finance Act 2024. According to the PDA, sales have decreased by more than 20 % and the closure of more than 500 milk collecting centers. In addition, the industry has suspended an annual investment of Rs 1.3 billion in the development and assistance of the farm due to tax burden.

In a media briefing, representatives of the PDA – including Chairman Usman Zahra, CEO Dr. Shahzad Iqbal, Dr. Nasir, and Tetra Pak Noor Iftab, have termed the implementation of 18 % GST on packaged milk as an “extraordinary” and harmful policy, which is the risk of farmers’ health, and the traditional health of the farmers.

He argued that the tax rate is excessive and unprecedented globally. “No developed or developing country imposes so much tax on basic nutrition, such as milk,” he said.

Poison explained that the formal industry of the dairy has already started buying 20 % less milk from the farmers, which has previously been forced to return to the unorganized trade of about 35 35 % of the milk in the formal supply chain. About 20 % of the centers of milk collecting centers are closed, infected with non -proportional small -scale dairy farmers. These farmers have lost the quality and safety of Rs.

He added that change in informal channels is discouraging investment and productivity in dairy farming. Consumers also face the effects of this. With the implementation of 18 % GST, the retail price of packaged milk has increased from Rs 280 to Rs 350 per liter. Referring to a Nelson study, the poison noted that two -thirds of Pakistani consumers earn less than Rs 50,000 per month, which leads to low and middle -income families, which lack safety assurances. He emphasized that “the most nutritious item in the average meal cart, has now become the most unbearable,” he said, emphasizing that access to safe, nutritious milk should be a fundamental right.

Iqbal warned that the official department of dairy was under intense pressure. With the processing plants working on less than 50 % capacity, companies have stopped branding and innovation efforts, while 20 % of the formal sector has already been released. The industry’s annual investment in consumer conversion has ended Rs 400 million. The PDA has warned that the country’s $ 30 billion milk export capacity is now at risk.

“When the formal sector rails are under pressure, unorganized loose milk market is promoting,” Iqbal said. He estimated that the milk sellers were occupying Rs 1,319 billion annually due to the milk sellers who sell informal milk. He added, “It has disrupted food protection, public health and economy documents.”

To change the loss, Dr. Nasir proposed to reduce sales tax on milk by 5.0 % from July 2025. The PDA has predicted that it will increase at least 20 %, public income will increase by 22 %, and in the next three years the revenue will become neutral. It will also overcome the informal economy, restore consumer access to safe milk, and attract new investment in fields, processing and exports.