Govt Plans 10% GST Cut on Dairy Products

Federal Minister for Commerce Jam Kamal Khan has directed the Pakistan Dairy Association to submit formal proposals aimed at reducing the General Sales Tax (GST) on dairy products from the existing 18% to 10%. Concurrently, Rana Ihsaan Afzal, Coordinator to the Prime Minister on Commerce, has been tasked with leading stakeholder consultations and developing a comprehensive policy framework.

The directive followed a consultative meeting between the Minister and a delegation of the Pakistan Dairy Association, led by CEO Dr Shehzad Amin. The session, which also included virtual participation by Rana Ihsaan Afzal and senior officials from the Ministry of Commerce, focused on addressing structural challenges within the dairy sector, including taxation, tariff barriers, productivity constraints, genetic improvement, and sector formalisation.

During the discussion, Jam Kamal Khan emphasized that enhancing the genetic quality of dairy livestock and transitioning farmers toward a formalised business framework are critical prerequisites for sustainable sectoral development. He highlighted that without systematic genetic improvement, optimal milk yields cannot be achieved, underscoring the need for regulatory support, farmer education, and institutional guidance.

The Pakistan Dairy Association noted that the current GST rate of 18% on dairy products is comparatively high, particularly when benchmarked against international practices where such products are either exempt or subject to minimal taxation.

In response, the Minister formally requested the submission of policy proposals to rationalise GST rates and directed Rana Ihsaan Afzal to coordinate closely with the Association to formulate a structured and actionable policy proposal.

The Minister further indicated that he would engage with provincial leadership, including chief ministers and relevant ministers, to ensure intergovernmental coordination for the effective implementation of proposed reforms and to facilitate the formalisation of the dairy sector nationwide.

In addition to taxation reforms, the Association presented a series of policy recommendations, including the provision of financial assistance and improved access to banking services for farmers, the introduction of regulatory standards mandating the sale of pasteurised and properly packaged milk, and the launch of pilot programmes in major urban centres to transition informal dairy operations into formal business structures.

The proposals also emphasized the importance of cross-breeding initiatives and targeted farmer training programmes to enhance genetic quality and improve overall productivity within the sector.

Minister Jam Kamal Khan welcomed the proposals and underscored the importance of developing a comprehensive and time-bound implementation strategy to ensure improved productivity, regulatory compliance, and enhanced economic contribution of Pakistan’s dairy industry.