KARACHI: Due to the government’s decision to impose a flat minimum retail price (MRP) of Rs1,200 per kg, the legal imports of black tea plunged 24 per cent year-on-year to $38 million in November.

Pakistan Tea Asso­ciation chairman Muha­mmad Altaf asked FBR to take notice of the decline in official impo­rts of tea during Nove­mber, thus causing Rs1.79bn revenue loss in a single month as a quarter of tea imports have been diverted to illegal channels.

After being imported into Pakistan in raw form, the tea is blended, mixed and processed before reaching consumers, he said.

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Mr Altaf said they disagreed with FBR’s decision to announce MRP as there was no rationale in it, and it disregards the nature of the tea trade and oversimplifies the market.

Under Serial No. 14 of the Third Schedule of the Sales Tax Act 1990, an 18pc sales tax is being applied on imported tea. Black tea, he said, should be treated as raw material and sales tax should accordingly be based on the import value as per Subsection 46(f) of Section 2 of the Sales Tax Act 1990 rather than the MRP.

If this trend continues, the PTA chief fears that a substantial portion of the revenue will be lost by the end of the current fiscal year.

Published in Dawn, December 7th, 2024