All packaged items become expensive in Pakistan after GST hike

Islamabad : The Pakistan government on Wednesday increased the General Sales Tax (GST) on all packaged items to 18 per cent, along with increasing tax on cigarettes, media reports said.

The Federal Board of Revenue (FBR) issued a notification in this regard, following which the implication of GST will be effective immediately, Samaa TV reported.

Edible oil, ghee, biscuits, spices, jam, jelly, noodles, toys, chocolates and coffee falling under the category of packed items will become expensive, the report said.

The new notification will also apply on make-up products, shaving foam, gel, cream, blade, shampoo, cream, lotion, soap and toothpaste.

With an increase in GST percentage, TV, LED, LCD, smartphones, iPods, computers, laptops and gadgets, juicers, blenders, shakers and other electronic items will become more expensive.

Economists said that a 1 per cent increase in the GST rate will put a burden of more than Rs 50 billion on Pakistani population, Samaa TV reported.

After getting approval from the federal cabinet on a mini-budget in the shape of Tax Laws Amendment Bill 2023, the FBR issued the statutory regulatory order (SRO) for hiking the GST rate from standard 17 per cent to 18 per cent and increasing the Federal Excise Duty (FED) on cigarettes in order to fetch an additional Rs 115 billion out of Rs 170 billion agreed to by the government in line with the IMF conditions, The News reported.

However, top official sources disclosed that the government also approved the GST on hundreds of high-end luxury items at the rate of 25 per cent but it will be introduced through the Tax Amendment Bill 2023, which would be laid down in the Parliament.

The FBR enhanced the GST rate on all those imported luxury items which were banned by the Ministry of Commerce sometime back in order to make imports more expensive. The enhanced rate of GST on some locally made luxury goods has also been proposed, The News reported.