ISLAMABAD: The government has proposed raising the higher General Sales Tax (GST) on more luxury items from 18 to 25 percent to generate additional revenue of Rs 11 billion, JEE News reported on Saturday. The Fund (IMF) will issue a $1.1 billion tranche in an effort to appease the financial institution as foreign exchange reserves are dangerously low.
It has been forwarded to the Federal Cabinet through summary circulation and its approval is awaited to add more items to the list.
The government has increased the list of items on which it aims to levy a GST rate of more than 25 percent. These items include airplanes and boats/ships (for pleasure, recreation, and private use), jewelry, and wristwatches.
Locally manufactured motor vehicles proposed to be taxed at a higher rate of 25% include only SUVs and CUVs, vehicles with engine capacity of 1400cc and above and quad cab pickup 4×4 trucks.
However, vehicle categories such as locally manufactured EVs (electric vehicles) up to 50 Kwh battery capacity, electric three-wheelers, e-bikes, and hybrid electric vehicles (HEVs) up to 2500cc have been excluded from the list. Continue to charge at the reduced rate provided under the Eighth Schedule to the Sales Tax Act, 1990.
Additionally, all commercial vehicles, i.e. regular cab (two-door) pick-up trucks and passenger transport vehicles are also excluded from the list.
It is proposed that the Federal Government in exercise of its powers under clause (b) of sub-section (2) may increase the rate of sales tax on luxury goods from 18 to 25 per cent. Read with the first proviso to clause (a) of sub-section (2) of section 3 of the Sales Tax Act, 1990.
The revenue impact of this tax measure is estimated at Rs 7 billion on imported luxury goods and Rs 4 billion on locally manufactured luxury vehicles.
The imported goods selected for enhanced sales tax rate of 25% are those goods which have been determined by the Cabinet as “Luxury Goods” and on their import vide SRO No. 598(I)/2022 in May 2022. The ban was imposed. 19, 2022.
These items include aerated water and juices, auto completely built units (CBU), sanitary and bathroom accessories, carpets (except Afghanistan), chandeliers and lighting fixtures or appliances, chocolates, cigarettes, confectionery items, Imports of cornflakes, cosmetics, shaving items were included. Tissue papers, crockery, decorations/ornamentals, dog and cat food, door and window frames, fish, footwear, fruits and dry fruits, furniture, household goods (CBU), ice cream, jams, jellies and preserved fruits, Luxury leather jackets and apparel, mattresses, and sleeping bags, frozen or processed meat, mobile phones (CBU), musical instruments, pasta, arms and ammunition, shampoo, sunglasses, tomato ketchup and sauces, travel bags and suits Case.
In view of the urgency, it is also suggested that Prime Minister Shehbaz Sharif may waive the need to present the summary before the Cabinet Committee on Legislative Cases (CCLC) and submit the summary to the Federal Cabinet through circulation. can allow
