The federal government is working on a proposal to impose Federal Excise Duty (FED) and additional sales tax on a wide range of popular packaged food items in the upcoming 2025-26 budget. The plan is aimed at generating Rs150 billion in additional revenue while protecting low-income consumers.
According to officials familiar with the matter, the items being considered include cakes, sweets (mithai), biscuits, chips, flavoured milk, syrups, sauces, dips, cereals, and ice cream. These products are currently either untaxed or lightly taxed but are seen as non-essential and high in consumption.
Read More: Govt Plans Easy Loan Scheme for 9 Million Small Farmers in Budget 2025-26
Industry estimates suggest that the confectionery sector alone could contribute Rs47.4 billion—Rs40.2 billion through FED and Rs7.2 billion via sales tax. The biscuit market, valued at Rs206 billion, is expected to yield Rs48.6 billion, while the chips category could bring in Rs22.4 billion.
Authorities have assured that the proposed taxes will be structured carefully to avoid impacting basic food staples or burdening economically vulnerable groups.
Officials believe this move will help broaden the tax net, promote fiscal sustainability, and reduce reliance on direct taxation, ultimately supporting economic growth and long-term revenue stability.