Tax experts call on FBR to put basic grocery products such as cooking oil, dairy products, frozen items on Third Schedule to ensure price transparency
Pakistan’s undocumented retail economy has long been seen as a tax problem. For households, however, its impact is much simpler: prices that are unclear, inconsistent and often decided at the counter.
A recent article published in Dawn, titled “Addressing markup consumer prices”, rightly brings this issue back into focus. It argues that Pakistan’s sales tax system continues to suffer from leakages because wholesalers and retailers remain largely outside effective documentation.
The article notes that additional taxes on unregistered retailers, including four per cent further tax and 2.5 per cent advance income tax on top of 18 per cent sales tax, have not worked as intended. Instead of pushing retailers into registration, these costs are often absorbed by formal manufacturers trying to protect market access.
This leaves the system lopsided. Retailers remain undocumented, manufacturers carry extra costs, the state loses revenue visibility, and consumers face unclear prices at the shelf.
This is where the Third Schedule of the Sales Tax Act becomes relevant. Under this regime, sales tax is collected upfront at the manufacturer or importer level on the basis of the printed retail price. In simple terms, the price is printed on the pack, visible to the consumer, and easier for regulators to monitor.
As reported in Dawn, expanding this regime to more everyday grocery items, including cooking oil, dairy products, flour, frozen foods and other packaged goods, could improve both tax compliance and price transparency.
For consumers, the printed price is the real protection. It reduces room for arbitrary markups, prevents confusion at the counter, and gives households a clear reference point in an inflation-hit market. This is especially important for essentials such as dairy, infant formula, cooking oil, flour, noodles, frozen foods and other packaged staples.
The Dawn article also points out that several consumer goods are already covered under the Third Schedule, including bottled water, biscuits, coffee, ice cream, chocolates, juices, beverages, packaged tea, spices, soaps and shampoos. If price printing can work for these categories, there is little reason why other high-consumption essentials should remain outside the same framework.
Expanding the Third Schedule will not fix retail informality overnight. But it is a practical step that gives consumers greater clarity, gives regulators a clearer enforcement point, and gives the state better visibility over taxable value.
At a time when every grocery bill matters, price transparency should not be treated as a technical tax issue. It is a basic consumer right.
