The cement industry in Pakistan is facing significant challenges following the announcement of higher taxes in the federal budget for 2024-25. Cement dealers across the country have initiated a nationwide strike in protest against these measures, particularly the increase in withholding tax to 2.5% for non-filers under Section 236H of the Finance Act 2024. This tax hike, coupled with new turnover taxes imposed on dealers and retailers, has rendered the cement business unsustainable amidst current market conditions.
Sajid Chaudhry, Chairman of the association representing cement dealers, expressed grave concerns over the impact of these measures on cement prices, which have surged to Rs. 1,500 per bag. He criticized the mandatory requirement for Point of Sale (POS) machines, arguing that many dealers and retailers lack the necessary resources and knowledge to comply with such demands.
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The association has called upon the government to intervene and proposed a presumptive tax regime as a viable solution. They warned that if these issues are not addressed promptly, it could lead to widespread business closures, increased unemployment, and adverse effects on the national economy.
In addition to the withholding tax increase, the federal government has also raised the Federal Excise Duty (FED) on cement from Rs. 2 per kg to Rs. 4 per kg for the upcoming fiscal year. This decision, initially proposed at Rs. 3 per kg, was doubled to Rs. 4 per kg by Finance Minister Muhammad Aurangzeb, further compounding the financial burden on the cement industry. The cement dealers’ strike underscores the growing tensions between industry stakeholders and the government over fiscal policies impacting the cost of doing business in Pakistan’s construction sector.
