Islamabad: The federal cabinet under the headship of Prime Minister Shehbaz Sharif has approved raising the general sales tax (GST) on luxury items on Tuesday. Hence another demand of the International Monetary Fund (IMF) has been fulfilled and the citizens of Pakistan are put in front of the barrel to bear the consequences of inflation.
According to details, the GST on luxury items has been increased to 25 per cent from 18 per cent. The decision has been taken to adhere to the demands of the IMF and unlock the $7 billion Extended Fund Facility (EFF). The new GST has been imposed through a circular summary and the Federal Board of Revenue would generate a formal notification.
General Sales Tax Increased
Under the new directive, the items that fall under the 25 pc GST are:
- Imported cars
- Mobile phones
- Cat & Dog food
- Sanitary & Bathroom wares
- Chandeliers & Lighting devices
- Confectionary items
- Corn flakes
- Shaving items
- Tissue papers
- Decoration/ornamental devices
- Doors and window frames
- Fruits and dry fruits
- Homes appliances
- Luxury leather jackets and apparel
- Mattress and sleeping bags
- Frozen or processed meat
- Musical instruments
- Arms and ammunition
- Tomato ketchup and sauces
- Travelling bags and suitcases.
The new GST by the federal government will also be applicable to locally manufactured vehicles of 1,400CC and above. FBR said that by imposing 25 pc GST, Rs15 billion will be collected as additional taxes.
IMF Shows Satisfaction
On Monday, Pakistan and IMF held virtual negotiations to revive the stalled loan program. IMF showed satisfaction with how Pakistan has implemented the measures.
Pakistan has reiterated its demand to finalise the staff-level agreement earlier than the due date. Media reports said that negotiations between the two sides are moving in a positive direction.