Increase in Rate of GST on Luxury Items in Pakistan to 25%

The rate of GST on luxury items including certain food items in Pakistan has been increased to 25% from the existing 18%.

The government has increased the rate of GST (General Sales Tax) on the sale of luxury items including certain food items and household goods from 18% to 25% on the value of taxable goods in a move to meet the targets set for revenue collection of PKR 170 Billion during the current fiscal year amid discussions with the IMF for ninth review of Extended Fund Facility. Earlier in mid-February 2023, the rate of GST was enhanced to 18% from the existing 17% and the federal excise duty on cigarettes was raised. The purpose is to ensure early disbursement of installments from the IMF amounting to USD 1.2 billion.

The revision was made through S.R.O No 297(I)/2023 dated 8th March 2023. The implication of the revised rate of GST falls on 33 categories of goods that cover 860 tariff lines. These include Airated water and juices, confectionery, vehicles in CBU condition (completely build units), sanitary and bathroom wares, carpets (excluding those from Afghanistan), chandeliers and lighting devices or equipment, chocolates, cigarettes, cigars, e-cigarettes, cornflakes and other ready to use cereals, cosmetics, shaving items, tissue paper, crockery, kitchenware, tableware, household articles, decoration or ornamental articles, dog and cat food , windows and door frames, fish, footwear, fruits and dry fruits (other than those imported via land route or barter system), furniture, home appliances (completely build units), ice cream, jams, jellies, preserved fruits and fruits and vegetable juices, leather jackets and apparels, mattress and sleeping bags, fresh or preserved (frozen or chilled) meat, musical instruments, pasta, arms and ammunition (other than that for defense stores), shampoos, sunglasses, tomato ketchup and sauces, traveling bags and suitcases, ship for recreation or private use, aircraft for recreation or private use, jewelry (both precious metals and imitation), wristwatches.

In addition to the above, locally manufactured/assembled SUVs and CUVs, vehicles having engine capacity of 1400cc and above, and double cabin pickup vehicles will also be subject to the increased rate of tax.

It is clarified in the SRO that the revised rate of tax as per the above-referred SRO will not have any implication on the goods specified in the Eighth Schedule of the Sales Tax Act 1990.