ISLAMABAD: The representatives of the beverage industry have called on Federal Finance Minister Ishaq Dar and asked him to withdraw 33% in federal excise duty (FED) on aerated waters, which would lead to an increase in prices of soft drinks.
In the new budget, the government has enhanced the FED on aerated waters from 9% to 12%. Dar have told the delegation that he would disclose his decision in the National Assembly while winding up the ongoing budget debate.
“Negotiations with the government are still going on,” said Rizwanullah, who represented Coca-Cola in the meeting.
The FED on aerated waters was 12% up to June 2011, which was later reduced to 9%. According to the FBR, the present 9% duty was too low to be adjusted against the FED paid on concentrates. Owing to the low rate, it said, not all aerated water manufacturers were paying the duty.
To address this issue, the FED had been increased to 12% in the new budget and it would generate at least Rs3 billion in additional revenues, said the FBR.
The beverage industry, however, is fiercely opposed to the sudden increase in its tax liabilities, fearing it will have adverse implications for the growth of business. On average, each manufacturer would be paying Rs250 million extra in the new fiscal year, said industry players. They have sought a gradual increase in the duty rate.
According to the FBR estimates, it will receive an additional Rs2 billion from major players and Rs1 billion from small players. If the government does not take back the decision, prices of soft drinks would be increased, likely after Eid, said industry people.
