ISLAMABAD, Feb 17: The government on Saturday slashed assessment value for levy of 15 per cent general sales tax (GST) on sugar, causing a Rs1.72 per kg decrease in its ex-factory price, from Rs29.32 per kg to Rs27.60.

Sugar mills will now pay GST on fixed value of Rs24 per kg instead of earlier Rs25.50 per kg which will help control price of sugar in the domestic market.

It will be the third subsequent downward revision of the assessment value for GST since the system came into existence. The assessment value for GST was first fixed at Rs29 per kg.

With the fixation of ex-factory price at Rs27.60 per kg which includes Rs3.60 GST, the government expects the retail price of sugar to remain within the range of Rs29 to Rs32 per kg.

Currently, the average sugar price at retail level stands at Rs30.75 per kg.

A sales tax official in the Central Board of Revenue (CBR) told Dawn that the assessment value for sugar was further reduced on the plea that sugar price has witnessed a considerable decline in the price in the domestic market.

Subsequently, millers have also slashed the per kg rate of the whitener to offload their stocks. With downward revision in the assessment value, the millers would now pay lesser GST to the government.

On a monthly basis, tax officials and the Pakistan Sugar Mills Association office-bearers will review price fixation. If retail price of sugar escalates, the fixation value will be revised, upward or downward.

The decision to reduce the assessment value was announced through a sales tax notification (SRO126) issued by the CBR, amending its earlier notification (SRO564) of 2006.

An estimated 52 million tons of cane production this year is expected to produce 3.8 million tons of sugar as against a requirement of 3.7 million tons.

The carryover stocks of 0.6 million tons, lying with the Trading Corporation of Pakistan, will increase the total production figures to around 4.4 million tons.

With the total available sugar stocks, which are much more than the requirement, there would be no room for millers and farmers to exploit consumers this year.