Government Moves to Increase Taxes: Prices of 43 Goods and Services Set to Rise
The government is preparing to amend the Value Added Tax (VAT) and Supplementary Duty Act, which may lead to increased VAT and duties on 43 goods and services, including medicines, powdered milk, cigarettes, biscuits, clothing, and air tickets.
The National Board of Revenue (NBR) disclosed that these changes could raise prices even before the upcoming budget.
The proposed amendments, part of the Value Added Tax and Supplementary Duty (Amendment) Ordinance-2025, received in-principle approval during an Advisory Council meeting on Wednesday, pending the vetting of the Parliamentary Affairs Department.
While the government has not officially announced the details, NBR sources have outlined several changes.
Key Proposed Changes:
Restaurant Bills: VAT on food bills in air-conditioned restaurants is set to rise from 5% to 15%, making dining out more expensive.
Clothing and Sweets: VAT on ready-made garment purchases and sweets may increase from 7.5% to 15%, significantly impacting consumer costs.
Non-AC Hotel Services: Travelers may face a rise in VAT on non-AC hotel services, with rates increasing from 7.5% to 15%.
Other Goods: Products like biscuits, pickles, tissue paper, mattresses, CR coils, and BRTA driving license cards may also incur a 15% VAT.
NBR officials explained that these measures aim to broaden the VAT base, reduce reliance on exemptions, and align VAT rates with standard levels to boost the tax-to-GDP ratio.
This sudden initiative, introduced midway through the 2024-25 fiscal year, reflects the government’s strategy to increase revenue through higher indirect taxes.
If implemented, these changes will likely increase costs across various sectors, impacting consumers and businesses alike.
