Sales Tax Increased on 33 Categories of “Luxury Items”, Including Private Jets, Ketchup & Ice Cream

In a last ditch effort to salvage its deal with the International Monetary Fund (IMF), the government has massively jacked the rate of Sales Tax from 17% to 25% on a variety of items, effective from March 8, 2023. These include many locally-assembled and imported automobiles, beauty and cosmetic products, food items and more. It is not known at the moment whether high-end phones would incur this new tax rate as there is no mention of them in the S.R.O.

Previously, the government had increased the rate of General Sales Tax (GST) from 17% to 18% and now the same has been increased to 25% on selected products. Though, this has been done through an S.R.O., and legal experts are divided on whether taxes can be raised through this instrument without seeking Parliament’s nod. It is likely that this latest move would be challenged in the courts. 

Whatever the case may be, the following items will cost you a lot more now. Including:

Automobiles (Locally Assembled – CKD) – Having engine capacity of 1,400cc and above. In addition, double cabin (4✕4) pick-ups, SUVs and CUVs, irrespective of their engine capacity.

Automobiles (Imported – CBU) – All vehicles though their import is currently banned.

The rest of the items are as follows:

  • Aerated water and juices
  • Chocolates
  • Cigarettes, cigars and e-cigarettes
  • Sanitary and bathroom wares
  • Carpets (excluding those from Afghanistan)
  • Confectionary
  • Cosmetics and shaving items
  • Tissue papers
  • Crockery, kitchenware and tableware and household articles
  • Footwear
  • Fruits and dry fruits (excluding those imported through land route or barter mechanism)
  • Decorations or ornamental articles
  • Dog and cat food
  • Doors and window frames
  • Fish
  • Furniture
  • Imported Home appliances
  • Ice cream
  • Jams, jellies, preserved fruits and fruit and vegetable juices
  • Leather jackets and apparels
  • Mattress and sleeping bags
  • Fresh, chilled, frozen, preserved or processed meat
  • Musical instruments
  • Pasta
  • Arms and ammunition excluding defense stores
  • Sunglasses
  • Tomato ketchup and sauces
  • 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
  • Articles of jewelry (both precious metals and imitation)
  • Chandeliers and lighting devices or equipment

Exempted Items

The following items have been exempted from this tax hike:

  • Locally manufactured electric vehicles
  • Electric buses
  • Road tractors for semi-trailers (Electric Prime Movers)
  • Computers, laptops
  • Cinematographic equipment
  • Three wheeler electric rickshaw
  • Second hand and worn clothing or footwear
  • Other items listed in the Eighth Schedule to the Sales Tax Act, 1990

Let us know what you make of this present tax hike. Other than ushering in another Mehangai ka Toofan, will it be able to satisfy the IMF and stabilize Pakistan’s economy in the long run? 

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