Govt to raise taxes on food, beverages in upcoming budget

Meat products such as sausages, dried, salted or smoked meats are expected to become more expensive.

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The government is likely to raise taxes on several food and beverage items in the upcoming 2025–26 federal budget, in a bid to boost tax revenue.

Under the proposed changes, excise duty on soft drinks, sweetened beverages, juices, carbonated soda water, flavoured or non-sugar sweets may be increased from 20% to 40%.

Items likely to be affected include carbonated beverages made from juice or pulp, syrups, and squashes. A new 20% tax has also been proposed on industrial dairy products.

Meat products such as sausages, dried, salted or smoked meats are also expected to become more expensive. Additionally, the tax rate on bakery and confectionery items—such as chewing gum, candy, chocolate, caramels, pastries, biscuits, corn flakes, and cereals—is expected to rise by 50%.

Frozen desserts, flavoured yoghurts, ice creams, and all food items made from animal or vegetable fat may also see a tax hike. The government plans a phased increase in these taxes over the next three years, with the total hike reaching 50%, the sources said.

Meanwhile, the defence budget for the upcoming fiscal year is expected to rise by Rs159 billion to a total of Rs2,281 billion.

This reflects a 7.49% increase from the current fiscal year (2024–25), which had an allocation of Rs2,122 billion. In comparison, the defence budget for 2023–24 stood at Rs1,858.8 billion—meaning this year’s allocation marked a 14.16% increase.

Over the past year, the defence budget has risen by Rs263.2 billion, underscoring the government’s ongoing commitment to national security amidst fiscal reforms.