(Web Desk) — Pakistani consumers who prefer packaged milk will face an additional cost of Rs50 per liter due to the implementation of an 18% General Sales Tax (GST) in the new budget, effective from July 1, as reported by Business Recorder.

Industry sources have warned that the proposed 18% sales tax on packaged milk could have catastrophic effects. If not reversed, it may cause the formal dairy sector to shrink by more than 70%.

The imposition of indirect sales taxes is anticipated due to losses amounting to at least Rs23 billion for farmers, who are still reeling from the government’s poorly planned wheat imports during the caretaker setup.

Industry insiders have pointed out that the profit erosion is discouraging the purchase of milk from farmers. The formal dairy industry plays a crucial role in improving farmers’ living standards through the proper procurement of milk.

“Pakistan is a country where 40 percent of children suffer from stunted growth, 29 percent are underweight, and 18 percent are wasted due to malnutrition. About 90 percent of the over 240 million Pakistanis consume fresh, unregulated milk, while only 10 percent use packaged milk,” they noted.

The dairy industry supports taxation for national development but insists on a level playing field for all stakeholders to ensure fair competition.