Inside Financial Markets

Cement prices up by Rs10-20/bag

Around two weeks after the announcement of enhanced Federal Excise Duty (FED) by 25 percent in the budget for next fiscal year, the cement prices have been increased by Rs10-20 to Rs540-550 per 50kg bag though the official implementation of duty will start from July 01.

The prices of different brands of cement have been increased in retail market of Lahore in the range of Rs10 to Rs20. Earlier, different companies’ cement bags were available in market costing from Rs525 to Rs530, which have now jumped to Rs540 to Rs550 per 50kg bag, depending on their market value and demand.

Presently, there are three popular brands in Lahore market including DG cement, Best way cement and Maple Leaf cement. The rate of DG cement has been jumped to Rs550 while the Best way cement and Maple Leaf cement are now available in market for Rs540 per bag though the retail price fixed on the bag is still Rs525. The cement bags of other unknown brands are selling for Rs525 per 50kg bag but there demand is not so high, dealers said.

They said that the government has announced to increase FED by 25 percent on cement to Rs1.25/kg or Rs1,250/ton in federal budget for 2017-18. The net impact on manufacturers’ cost has increased by around Rs15/bag as sales tax is levied on top of FED. They said the increase in FED is second consecutive times, as the government had increased the cement price by Rs1 per kg in the last federal budget of 2016-17, affecting the common man who had humbles resources for house building. The industry had suggested in its budget proposal that the Federal Board of Revenue (FBR) should phase out the FED to encourage cement off take. The cement industry was subject to FED at the rate of 5 percent of retail price and General Sales Tax at the rate of 17 percent of maximum retail price. These taxes account for about Rs100 per bag.

The abolition of the excise duty will not only eliminate tax evasion but also enhance cement consumption at reduced price, the industry stakeholders said. They said the government should impose 20 percent regulatory duty on import of cement in addition to Customs Duty to protect the local industry. They said that policy makers were informed of many issues which are impeding the growth of cement sector, much before the preparation of the budget and the concerned circles assured that the genuine concerns of industry will be addressed. But regrettably, the government chose to ignore the issues and imposed measures that have jacked up the cement prices.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)