Consumers could soon pay up to Rs. 15 more per kilogram for ghee and cooking oil after the federal government introduced a new sales tax collection mechanism in the 2025-26 budget, industry representatives have warned.

Pakistan Vanaspati Manufacturers Association (PVMA) Chairman Sheikh Umer Rehan said the budget expands the scope of the Third Schedule by shifting sales tax collection on ghee and cooking oil to the products’ Maximum Retail Price (MRP) instead of the ex-factory price.

According to Rehan, the change will significantly increase the tax burden on manufacturers, who are expected to pass the additional cost on to consumers through higher retail prices.

He said the edible oil and ghee industry had requested tax relief in the budget to help keep prices affordable, but the latest fiscal measures have instead increased the sector’s tax burden.

Under the Third Schedule, sales tax is calculated on the printed retail price rather than the manufacturer’s selling price, resulting in higher tax collection and, ultimately, higher prices for consumers. Industry estimates suggest the new mechanism could raise retail prices of ghee and cooking oil by Rs. 10 to Rs. 15 per kilogram.