More luxury items set to attract sales tax in upcoming Pakistan budget

ISLAMABAD: The government is planning to expand the list of luxury items on which a higher rate of 25 percent sales tax would be applicable on the import and local supply stages in the federal budget (2025-26).

The government will amend SRO 297(I)/2023 or introduce a separate Schedule in the Sales Tax Act through Finance Bill 2026.

Sources said that the list of items would be expanded by including more home-appliances, tiles/wall papers, expensive wristwatches and many other items. This is a revenue generation measure and also compensates revenue loss on account of reduction of customs duties, regulatory duties and Additional Customs Duties (ADCs) in budget (2025-26).

RD slapped on 657 luxury goods: 2pc ACD imposed on import of 2,200 items

Under SRO297 of 2023, the Federal Board of Revenue (FBR) had imposed 25 percent sales tax on the import and local supply of luxury items including aircraft, ships, jewellery, cosmetics, cigarettes, high-end mobile phones, imported food, decoration items, certain categories of vehicles and other luxury goods.

The sales tax was raised from 17 percent to 25 percent on 33 categories of goods covering 860 customs tariff lines.

According to an SRO 297(I)/2023, the federal government has directed that the sales tax shall be charged, levied and paid at the rate of 25 percent of the value of the goods imported and their subsequent supply or the retail price, as the case may be and the sales tax shall be charged, levied and paid at the rate of 25 percent of the value of the supply of specified goods.

Copyright Business Recorder, 2025