Government considers zero percent FED on no-sugar juices

ISLAMABAD: Pakistan government is reviewing a proposal from the fruit juice industry to impose zero percent or a lower Federal Excise Duty (FED) on a new category of juices made without added sucrose or white sugar.

The industry has urged policymakers to clearly distinguish fruit juices and beverages from carbonated drinks for tax purposes, arguing that delinking the two categories is essential for building a strong fruit procurement value chain that benefits farmers and promotes healthier consumption.

Senator Saleem Mandviwalla, chairman of the Senate Standing Committee on Finance and Revenue, has endorsed the industry’s request to exempt the new no-sugar juice category from FED, reports suggest.

The Fruit Juice Council reported a 50% decline in sales following the imposition of a 20% FED on juices in the Annual Budget 2023-24, on top of an existing 18% sales tax. Industry volumes have since plunged more than 45%, erasing gains and bringing volumes back to 2017 levels.

The industry is now asking the government to reduce FED on existing juice variants from 20% to 10% in the Federal Budget 2026-27 and to apply no FED on new products formulated without white sugar.

“The formal fruit juice industry is ready to invest in and launch a new category that will address this major concern and have no added sucrose or white sugar,” an industry representative said. “This will give consumers another choice by bringing an even healthier option within the fruit juices segment.”

The documented packaged juice industry, largely localized, procured an estimated 100,000 tons of mangoes, kinnows, apples and guava from local farmers in 2022 for conversion into pulp. But since the FED was imposed, procurement volumes have dropped more than 50% compared with 2022, falling below 2017 levels.

Industry officials said the shrinking business is hurting fruit farmers and pulp processors, while pushing consumers toward low-priced, low-quality and potentially unsafe alternatives from the undocumented sector, which accounts for nearly 20% of the market.

The fruit-based juice industry had an annual turnover of about Rs 40 billion in 2025. Food authorities promote fruit-based juices as a healthier option, with fruit drinks containing minimum 8% fruit content, nectars 25%-50% fruit content, and pure juices 100% fruit content, in line with local regulations.