18% GST on Milk Choking Dairy Sector, Says Pakistan Dairy Association

The Pakistan Dairy Association (PDA) has claimed that the 18 percent GST on packaged milk is not delivering expected tax revenues and is instead throttling both industry growth and formal documentation efforts. According to PDA officials speaking at a media briefing, the tax has caused over 20 percent volume decline in the formal dairy sector. Simultaneously, the government is unlikely to meet its revenue targets due to the contraction in taxable sales. The PDA estimates that reducing GST to 5 percent starting July 2025 could boost sales volumes by 20 percent, increase formal sector participation, and grow government revenue by 22 percent annually. “It becomes a neutral policy in Year 3, and growth-positive from there on,” said Noor Aftab of Tetra Pak. As rural communities face the brunt of declining formal sector engagement, PDA leaders warn that the tax policy threatens to reverse years of development work in Pakistan’s dairy farming ecosystem. They urged the government to recognize the wider implications for rural livelihoods —arguing that a revised 5 percent GST could revive inclusive growth in the sector.