The federal government is preparing to introduce new taxes on high-consumption packaged food items in the upcoming 2025–26 budget, aiming to generate an estimated Rs. 150 billion in additional revenue. The plan includes the imposition of Federal Excise Duty (FED) and supplementary sales tax on various processed food categories that are currently either untaxed or lightly taxed.
Items under consideration include cakes, sweets (mithai), biscuits, sauces, dips, flavored milk, cereals, syrups, ice cream, and chips. These food products have been chosen specifically to avoid placing financial strain on lower-income households, while still contributing significantly to the national exchequer.
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According to industry projections:
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The confectionery segment (cakes and sweets) could generate Rs. 47.4 billion in revenue, including Rs. 40.2 billion from FED and Rs. 7.2 billion from sales tax.
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The biscuit category, valued at Rs. 206 billion, may yield Rs. 48.6 billion — Rs. 41.1 billion from a 20% FED and Rs. 7.4 billion in sales tax.
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The chips market, worth Rs. 96 billion, could contribute Rs. 22.4 billion — Rs. 19 billion in FED and Rs. 3.4 billion from sales tax.
The proposed tax framework is designed to avoid impacting essential food products and to shield economically vulnerable groups. The government believes this strategy will not only stabilize revenue streams but also support economic growth and business continuity.
