According to local reports, the government is likely to raise the federal excise duty (FED) on cement by some Rs.100/t in the upcoming budget for FY14 – 15.
Officials from the country’s Federal Board of Revenue (FBR) stated that the government promised cement manufacturers that FED would be gradually lowered and eventually phased out within a time frame of approximately three years. The FED on cement was decreased in FY11 – 12 from Rs.750/t to Rs.500/t and duty was slashed from Rs.500/t to Rs.400/t in FY12 – 13. However, reports suggest that FED is expected to increase by around Rs.100/t in the FY14 – 15 budget due to a shortfall in the registered collection of tax revenue. This may result in a rise in the price of cement by some Rs.5 per bag. Officials noted that no final decision has been made.
Analysts believe that due to the FBR’s ambitious tax revenue target for FY14 – 15, the chances of an increase in FED seem high. However, other experts expect that the upcoming budget could have a positive affect on the cement sector due to a rise in funding for the Public Sector Development Programme (PSDP), which is likely to increase domestic cement demand.
Edited from various sources by Rosalie Starling