Juice industry calls for lower FED, citing 45% drop in sales

Pakistan's packaged fruit juice industry has urged the government to revise the Federal Excise Duty (FED) regime in the upcoming federal budget, arguing that high taxation has severely hurt the documented sector, reduced demand for locally sourced fruits and encouraged the growth of unregulated alternatives.

The Fruit Juice Council (FJC) called on policymakers to introduce a differentiated tax framework for fruit-based beverages, proposing a reduction in FED on existing packaged juice products and a complete exemption for juices containing no added sucrose or white sugar.

Industry Proposes FED Reduction

In its budget recommendations for fiscal year 2026-27, the council proposed reducing the current FED on packaged juice products from 20% to 10%.

It also called for a zero-FED regime for a newly defined category of fruit juices with no added sucrose or white sugar, saying the measure would encourage healthier consumer choices and support product innovation.

According to the council, packaged fruit juices currently face a combined tax burden of 20% FED and 18% General Sales Tax (GST).

Industry Volumes Down More Than 45%

The council said the current taxation structure has significantly affected the formal juice sector, with industry volumes declining by more than 45% since 2023.

It warned that the contraction of the documented industry has accelerated the growth of low-quality and unregulated products in the informal market, raising concerns about food safety, tax compliance and long-term revenue collection.

"The industry is fully aligned with the government's objective of promoting healthier consumption choices," said Aatekah Mir Khan.

"We are proposing that the existing FED be reduced from 20% to 10%, while exempting the new no-added-sucrose and white-sugar category from FED to encourage healthier innovation, improve affordability and revive the documented sector," she said.

Impact on Agriculture and Rural Livelihoods

Industry representatives said the decline in the formal juice sector is also affecting Pakistan's agricultural value chain.

Faisal Ahmad Nisar, chief financial officer of Shezan International Limited, said the packaged juice industry remains closely linked to local fruit growers and processors.

"The formal juice industry is deeply connected with local fruit farmers, pulp processors and rural livelihoods," Nisar said.

"The continued decline of the documented sector is directly reducing demand for locally sourced fruits, discouraging investment in agricultural processing and affecting thousands of farmers linked to the value chain," he added.

Call for Differentiated Tax Treatment

The Fruit Juice Council said fruit-based beverages should not be taxed in the same manner as carbonated soft drinks because of their direct link to Pakistan's agriculture and fruit-processing sectors.

The industry body urged the government to adopt a supportive fiscal framework in the FY27 budget that recognizes the sector's contribution to agriculture, nutrition, employment and economic growth.

According to the council, lower excise duties could help revive industry growth, increase demand for locally produced fruits and strengthen the documented economy while encouraging healthier beverage consumption.