Sales tax on luxury goods hiked to 25pc

ISLAMABAD: The government has raised the sales tax from 17 per cent to 25pc on 33 categories of goods covering 860 tariff lines, high-end mobile phones, imported food, decoration items, and other luxury goods.

The Federal Board of Revenue (FBR) late on Wednesday night issued SRO297 of 2023 to implement the last part of the Rs170 billion tax revenue measures to unlock the IMF tranche.

The government has already notified the tax measures in two phases ­— i.e. on Feb 14 and March 1.

Home appliances, recreation items, pet food, etc, to cost more

The luxury items that will be subject to 25pc sales tax in the category of food import include confectionery, jams and jelly, fish and frozen fish, sauces, ketchup, fruits and dry fruits, preserved fruits, cornflakes, frozen meat, juices, pasta, aerated water, ice cream, and chocolates.

Vehicles in completely built-up units (CBU) conditions, sanitary and bathoom wares, home appliances, cosmetics, crockery, pet food, private weapons and ammunition, shoes, chandeliers and lighting (except energy savers), headphones and loudspeakers, doors and window frames, travelling bags and suitcases, sanitary ware, carpets (except from Afghanistan), tissue paper, furniture, shampoos, luxury mattresses and sleeping bags, bathroom ware, toiletries, heaters, blowers, sunglasses, kitchenware, cigarettes, shaving goods, luxury leather apparel, musical instruments, saloon items like hair dryers, etc., and decoration/ornamental articles.

The high sales tax will also apply to dog and cat food, a ship designed or adapted for use for recreation or pleasure or private use, an aircraft designed or adapted for use for recreation or pleasure or private use, and articles of jewellery and wristwatches.

The GST was also raised to 25pc on the supply of locally manufactured goods — 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.

Finance Minister Ishaq Dar last month through the Finance (Supplementary) Bill 2023 introduced tax measures to raise an additional Rs170bn in the next four and a half months to meet the last prior actions agreed upon with the IMF to secure early disbursement of about $1.2bn instalment.

Two measures — raising the federal excise duty on cigarettes and increasing the general sales tax rate from 17pc to 18pc — were implemented through SROs on Feb 14.

Other measures were implemented from March 1 soon after the assent of the Finance Act 2023 by President Dr Arif Alvi.

Published in Dawn, March 9th, 2023