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Business News/ News / World/  ‘Imported food to SUVs’: Pakistan govt imposes 25% sales tax on 33 items | Full list here
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‘Imported food to SUVs’: Pakistan govt imposes 25% sales tax on 33 items | Full list here

Pakistan economic crisis: The International Monetary Fund (IMF) is refusing to release the USD 1.1 billion tranche under the USD 7 billion loan facility unless crucial decisions are made by the government and implemented.

Pakistan government raises sales tax on luxury items to 25 per cent. Premium
Pakistan government raises sales tax on luxury items to 25 per cent.

The Pakistan government has increased sales tax from 17% to 25% on 33 categories of goods including decorative items, high-end mobile phones, imported food, and other products, as the cash-strapped country was taking steps to unlock the USD 1.1 billion tranche of funding from the IMF.

The International Monetary Fund (IMF) is refusing to release the USD 1.1 billion tranche under the USD 7 billion loan facility unless crucial decisions are made by the government and implemented.

Pakistan's Federal Board of Revenue (FBR) issued a notice to implement the last part of the 170 billion tax revenue measures with effect from Wednesday, March 8. 

List of items on which 25% sales tax applied, 

1) Aerated water and juices

2) Confectionary items

3) Vehicles in CBU condition

4) Sanitary and bathroom wares

5) Carpets (excluding those from Afghanistan)

6) Chandeliers and lighting devices

7) Chocolates

8) Cigarettes and cigars

9) Ready-to-use cereals

10) Cosmetics and shaving items

11) Tissue papers

12) Kitchenware and household items

13) Decorations or ornamental articles, articles of jewelry, wristwatches

14) Dog and cat food

15) Doors and window frames

16) Fishes

17) Footwear

18) Fruits and dry fruits

19) Furniture

20) Home Appliances

21) Ice cream, jam, jellies

22) Leather jackets

23) Mattress and sleeping bags

24) Fresh, chilled, frozen meat

25) Musical instruments

26) Pasta, tomato catchup, sauces

27) Arms and ammunition excluding defense stores

28) Shampoos

29) Sunglasses, traveling bags, and suitcases

30) A ship, or aircraft for private use

The pkrevenue report also mentioned that the country has also slapped 25% sales tax on import of mobile phones valuing above $500 per piece. 

Apart from these commodities, 25% GST has also been imposed on three categories of locally manufactured goods which include locally manufactured or assembled SUVs and CUVs, locally manufactured or assembled vehicles having engine capacity of 1,400cc and above, and locally manufactured or assembled double cabin (4x4) pick-up vehicles. 

The FBR has estimated that it can fetch 7 billion by raising taxes on imported luxury goods and 4 billion on locally manufactured vehicles in Pakistan.

Pakistan has already taken most of the other prior actions, which included hikes in fuel and energy tariffs, the withdrawal of subsidies in export and power sectors, and generating more revenues through new taxation in a supplementary budget.

On the IMF's behest, Pakistan unveiled a mini-budget on February 21, raising the GST rate from 17% to 18% to fetch additional tax revenues of 170 billion to unlock the IMF tranche, the report said.

Pakistan and the IMF have been holding virtual talks after the two sides held ten days of intensive negotiations with an IMF delegation in Islamabad from January 31 to February 9, which failed to reach an agreement on the USD 1.1 billion tranche of funding from the global lender.

Finance Minister Ishaq Dar vowed on Thursday that the government was “absolutely committed" to completing the current USD 7 billion bailout program with the IMF, indicating that Pakistan could sign the staff-level agreement with the global lender this week.

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Published: 10 Mar 2023, 10:22 AM IST
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