FBR Extends Tax Relief On Sugar Imports

The Federal Board of Revenue has extended the applicability of tax exemptions and concessional duty rates on sugar imports undertaken by the Trading Corporation of Pakistan until February 28, 2026, in accordance with recently issued notifications.

The extension covers imports of up to 500,000 metric tons of sugar, allowing continued exemption from customs duty while maintaining significantly reduced tax rates on such imports.

Under the revised regime, the applicable sales tax has been reduced to 0.25% from the standard rate of 18%, while withholding tax under Section 148 of the Income Tax Ordinance will also be levied at a reduced rate of 0.25% on the import value.

The FBR has thereby extended the earlier deadline of November 30, 2025, enabling eligible importers to continue benefiting from these fiscal concessions through the end of February 2026.

Officials have indicated that this policy substantially lowers the overall tax incidence on sugar imports. Ordinarily, such imports are subject to a cumulative tax burden of approximately 47.5%, comprising customs duty, general sales tax, value-added tax, and income tax. Under the current arrangement, the majority of these levies have been either waived or reduced, leaving an effective tax burden of approximately 5%.

The concession applies to imports executed through the Commerce Division via TCP, as well as those undertaken by private sector participants, subject to quota allocations and compliance with stipulated conditions for both immediate and future supply requirements.

Additionally, the Commerce Division has been tasked with ensuring quality assurance of imported sugar through verification conducted by an internationally recognised inspection firm.

The initial deadline for availing these exemptions was September 30, 2025, which has now been formally extended to February 28, 2026, under the latest regulatory decision.