January 06, 2009	Tuesday	Muharram 08, 1430

ISLAMABAD, Jan 5: The government on Monday raised the assessment value for the levy of 16 per cent general sales tax (GST) on sugar, causing a Rs4.38 per kg increase in the ex-factory price of the commodity to Rs28.88 per kg from Rs24.50.

Mills will now pay GST on the fixed value of Rs28.88 per kg instead of the earlier Rs24 per kg, which will escalate its price in the domestic market. The levy of one per cent federal excise duty will be an additional duty, besides GST.

The retail price of sugar is already hovering around an average Rs40 per kg in the open market.

With the increase in the ex-factory price, the retail price of sugar is now expected to remain around Rs45 per kg before the arrival of the new crop in the market.

According to official figures compiled by the Federal Bureau of Statistics, the sugar price stood at maximum Rs40 per kg in the federal capital followed by Rs38 per kg in Rawalpindi, Peshawar and Lahore, Rs37 in Sialkot, Karachi, Faisalabad and Gujranwala, Rs36 in Bannu, Multan, and Bahawalpur.

However, sugar is being sold at Rs35 per kg in Quetta, Hyderabad, Sukkur, Larkana and Rs34 per kg in Khuzdar.

A source in the ministry of industry and production told Dawn that a powerful lobby in the government was tailoring this unexpected increase in the price of sugar in the retail market for delaying the import of 0.4 million tons of raw sugar.

The ministry of industry had already moved a summary to the Economic Coordination Committee (ECC) of the federal cabinet for consideration but the decision was delayed during the recent meeting.

The source said that the ECC rather taking action has further asked the ministry to work out another action plan to protect the interest of farmers. However, the ECC has not given any deadline for submission of the summary in this regard, the source added.

The ministry of industry has already informed the government that the total stock of sugar was sufficient only up to January 2009, while stock with the Trading Corporation of Pakistan (TCP) would be depleted during this period as it would be supplying sugar to the Utility Stores Corporation (USC).

The country is expected to face a shortfall of around 0.4 million tons of sugar during the 2008-09 season owing to 20 to 30 per cent decline in cane production.

According to the tax officials, if the retail price of sugar escalated further, the fixation value for the assessment of GST would be revised upward.

The decision to increase the assessment value was announced through a sales tax notification SRO 4 of 2009 issued by the FBR, amending its earlier notification SRO 564 of 2006.