Sugar GST Hike: Govt Restores 18% Tax on Imported Sugar Amid Rising Imports
The federal government has announced a sugar GST hike as it restores the 18 percent general sales tax on imported sugar. This decision comes after a period of tax relief aimed at stabilizing prices. However, officials now say the focus is shifting toward revenue and fiscal balance.
The move follows reports of a possible new price shock in the market. In response, the government withdrew the earlier concession and reinstated the standard tax rate. The revised 18 percent GST took effect from April 22, 2026.
Tax Policy Reversal and Import Surge
Authorities had earlier reduced the GST rate to 0.25 percent. That relief supported sugar imports under a government-backed plan. For example, the Trading Corporation of Pakistan imported large volumes to control shortages.
However, the situation changed quickly. Sugar imports surged by more than 7,900 percent in the first seven months of the current fiscal year. They reached over $17.46 million compared to just $211,800 last year.
In addition, imports rose again in January 2026 to $23.4 million. This sharp increase suggests that the tax concession significantly boosted import activity.
Officials originally allowed the import of 500,000 tons of sugar at lower tax rates. The aim was to manage rising domestic prices and ensure supply stability. Now, the policy has shifted as conditions evolved.
Wider Economic Pressure
Pakistan’s total food imports also increased during the same period. They rose by 19.26 percent and crossed $5.5 billion. Key imports included palm oil, tea, and dried fruits.
This trend highlights ongoing pressure on the country’s external account. Therefore, policymakers are reviewing trade and tax strategies more closely.
The restoration of the 18 percent GST reflects a broader policy shift. Authorities now aim to balance market stability with stronger revenue collection and fiscal discipline.
