Tea imports drop 24% amid flat MRP of Rs1,200 per kg

Imports of black tea fell by 24% year-on-year to $38 million in November, following the government’s imposition of a flat minimum retail price (MRP) of Rs1,200 per kilogram. 

Pakistan Tea Association (PTA) Chairman Muhammad Altaf has urged the Federal Board of Revenue (FBR) to address the decline, citing a revenue loss of Rs1.79 billion in just one month due to an estimated quarter of tea imports shifting to illegal channels.

Highlighting the tea trade’s dynamics, Altaf explained that imported tea is processed and blended before reaching consumers, making the application of an 18% sales tax on the MRP inappropriate. 

He argued that black tea should be treated as a raw material, and sales tax should be applied based on its import value, as per Subsection 46(f) of Section 2 of the Sales Tax Act 1990, rather than on the fixed MRP.

Altaf criticized the MRP policy, stating that it oversimplifies the complexities of the tea trade and could lead to significant revenue losses by the end of the fiscal year. 

He called on the FBR to reconsider the policy and align it with the realities of the tea market to prevent further damage to legal imports and government revenue.