The Pakistani government has increased the sales tax on 33 categories of goods, covering 860 tariff lines, from 17 percent to 25 percent. A number of high-end mobile phones, imported food, and luxury items are affected by this move, which aims to boost revenue.
Through SRO297 of 2023, the Federal Board of Revenue (FBR) put the last of the Rs 170 billion in tax revenue measures into effect in order to release the IMF tranche. On February 14 and March 1, the government had already given two-phased notices of the tax measures.
There will be price increases on a variety of goods, including pet food, recreation gear, and home appliances. The 25% sales tax is applicable to a number of luxury food items, including candy, jams and jellies, frozen fish, sauces, ketchup, fruits and dry fruits, cornflakes, frozen meat, juices, pasta, aerated water, ice cream, and chocolates.
The luxury tax also applies to vehicles in completely built-up units (CBU) conditions, sanitary and bathroom wares, cosmetics, crockery, private weapons, and ammunition, shoes, chandeliers and lighting (except energy savers), headphones and loudspeakers, doors and window frames, traveling bags and suitcases, carpets (except from Afghanistan), tissue paper, furniture, shampoos, luxury mattresses, bathroom ware, toiletries, heaters, blowers, sunglasses, kitchenware, cigarettes, shaving goods, luxury leather apparel, musical instruments, salon items, and decoration/ornamental articles.
Additionally, the GST was increased to 25 percent on the supply of locally manufactured goods, which include locally manufactured or assembled SUVs and CUVs, locally manufactured or assembled vehicles with engines of 1,400cc and above, as well as locally manufactured or assembled double-cabin (4×4) pickup trucks.
To meet the last prior actions agreed upon with the IMF to secure early disbursement of about $1.2bn installment, Finance Minister Ishaq Dar introduced tax measures last month to raise an additional Rs170bn in the next four and a half months.
On February 14, SROs were used to put into effect the two measures—raising the federal excise tax on cigarettes and raising the general sales tax from 17% to 18%.
As soon as President Dr. Arif Alvi gave his approval to the Finance Act 2023, other measures went into effect on March 1. These tax policies are designed to bring in much-needed funds so that Pakistan’s government can meet its spending goals and maintain economic stability. However, it might also result in a price increase for those who buy these upscale goods.
