Budget 2025-26: Ice Cream, Noodles & Snacks to Get Costlier

The federal government is gearing up to unveil the Budget 2025-26 in early June, with a major focus on enhancing revenue through new taxation measures. One of the key proposals under consideration is the imposition of Federal Excise Duty (FED) on a wide range of edible products.

In a bid to tackle fiscal challenges and generate funds, the government plans to levy a 5 percent FED on over 50 categories of ultra-processed food items. “This move aims to boost indirect tax revenue by generating approximately Rs. 250 billion,” said sources from the Federal Board of Revenue (FBR).

Among the products expected to come under the tax net are commonly consumed items like soft drinks, ice cream, instant noodles, frozen meat, packaged chips, biscuits, sauces, ready-to-eat meals, and other processed foods. “The list of items likely to be taxed includes popular products like frozen meat, packed chips, sods, instant noodles, biscuits, ice cream, sauces, ready-to-eat meals, and several others.”

Officials explain that this proposal is part of a broader strategy to widen the excise duty base and improve government revenue collection. If approved, it will mark one of the largest indirect tax measures introduced in recent years.

Industry stakeholders and consumer advocacy groups are closely monitoring the situation, concerned that these taxes may lead to higher retail prices and impact consumer behavior.

“The government hopes that the additional revenue collected through this duty will help strengthen fiscal resources and support ongoing economic initiatives.”

Meanwhile, ongoing discussions between Pakistan and the International Monetary Fund (IMF) regarding the 2025-26 budget continue. “Pakistan’s economy shows improvement with a current account surplus, lower inflation, and increased investor confidence.”

However, significant obstacles remain. The IMF has called for firm fiscal discipline. “The IMF expects Pakistan to reduce its fiscal deficit, control spending, and maintain a primary surplus to ensure debt sustainability and support moderate economic growth.”

The federal budget for 2025-26 is expected to be officially presented on June 2.