Dairy Association urges GST reduction to restore nutrition access and industry stability

Published on: June 19, 2025 11:10 PM

The Pakistan Dairy Association (PDA) has called on the federal government to urgently revise its taxation policy on milk, warning that the current 18% General Sales Tax (GST) on packaged dairy products is undermining both public nutrition and the formal dairy economy.
Speaking at a media briefing in Lahore, PDA Chairman Usman Zaheer, CEO Dr. Shehzad Amin, and Tetra Pak’s Director of Corporate Affairs (Pakistan & MENA) Noor Aftab highlighted the far-reaching effects of the tax imposed through the Finance Act 2024. They termed the levy “an anomaly globally,” as no other country taxes milk this high—not even in developed economies.
Milk is not a luxury item. It is a basic nutritional necessity, especially for children and low-income families. Since the introduction of the 18% GST, retail milk prices have surged to Rs. 350 per liter, making it unaffordable for millions. As a result, consumers are increasingly switching to unregulated loose milk, which raises serious concerns regarding food safety and public health.
The association presented data showing a 20% decline in packaged milk volumes, closure of 500 milk collection centers, and abandonment of Rs. 1.3 billion worth of annual farm-level investments. Additionally, formal employment in the sector has shrunk by 20%, while processing capacity remains underutilized, operating at less than 50%.
The PDA also emphasized the unintended economic consequences of the tax. While the formal sector contracts, the informal milk market—dominated by loose milk vendors—has gained significantly, profiting an estimated Rs. 1,319 billion annually, without any contribution to tax revenue or quality assurance standards.
The PDA has urged policymakers to reconsider the tax rate on milk in the upcoming federal budget to protect food security, economic sustainability, and public health. “This is a unique opportunity for a win-win reform—where consumers, farmers, businesses, and the government all benefit,” concluded Zaheer.