ISLAMABAD – Pakistan’s dairy sector has called on the federal government to reduce the General Sales Tax (GST) on packaged milk from the current 18% to 5%, arguing that the high tax is damaging the formal dairy industry, discouraging investment, and contributing to rising malnutrition levels in the country.
The appeal was made during a policy dialogue held in Islamabad by the Sustainable Development Policy Institute (SDPI), where key stakeholders from the dairy industry, government, and research organizations highlighted the adverse effects of over-taxation on the sector.
Industry representatives revealed that since the imposition of 18% GST, the consumption of packaged milk has dropped by nearly 20%, leading to the closure of over 500 processing units. They warned that the informal milk sector—largely unregulated—has grown as a result, now accounting for over 90% of the market, raising serious concerns about hygiene, quality, and public health.
Speaking at the event, Federal Minister Rana Tanveer Hussain acknowledged the challenges facing the dairy industry and confirmed that the government is reviewing the tax structure. He assured stakeholders that he would personally take up the issue with the Prime Minister’s Office and advocate for reforms that benefit both producers and consumers.
The Pakistan Dairy Association (PDA), along with companies such as FrieslandCampina Engro, argued that reducing GST to 5% would align Pakistan with international best practices, where milk is generally taxed at minimal rates or exempt altogether. They emphasized that such a move would make milk more affordable, encourage formal sector growth, and enhance investment in processing and cold chain infrastructure.
Experts also highlighted that the high cost of milk is affecting nutrition among lower-income households, especially children. Malnutrition, stunting, and anemia remain critical health challenges in Pakistan, and access to safe, affordable milk is seen as part of the solution.
The dairy sector contributes over Rs 1.3 trillion to the national economy annually. Stakeholders now hope that the upcoming federal budget will reflect the urgency of their appeal and include measures to revive the industry and ensure nutritional security.
Reported by PakTribune Business Desk
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