Amidst the existing high inflation, the government has implemented an increase in value-added tax (VAT) and supplementary duty (SD) on more than a hundred products and services, including hotels, restaurants, telecommunication, internet, medicines, soft drinks, and cigarettes.
This adjustment, introduced through two new ordinances issued on Thursday, is expected to significantly impact costs across multiple sectors, burdening consumers further.
This mid-year adjustment during the 2024–25 fiscal period comes as a surprise to many and is set to drive up the prices of a wide range of goods and services.
For instance, the supplementary duty on mobile phone services has increased, which will lead to higher expenses for both calls and internet usage. Dining out at restaurants will also become costlier, as will purchasing clothing and other everyday items.
The two ordinances, namely the VAT and Supplementary Duty (Amendment) Ordinance-2025 and the Excise and Salt (Amendment) Ordinance-2025, were officially issued yesterday.
Following their publication, the VAT Department of the National Board of Revenue (NBR) released the necessary instructions to enforce the changes. Consequently, the increased VAT and supplementary duties took immediate effect.
According to sources within the NBR, these measures are part of the government’s efforts to meet the conditions stipulated by the International Monetary Fund (IMF).
The proposal to increase VAT and supplementary duty was approved during the January 1 meeting of the Advisory Council of the interim government.
After receiving approval from the Chief Advisor and the President, and subsequent legal review by the Law Ministry, the changes were issued as ordinances.
The absence of the National Parliament necessitated this approach to amending customs duties.
Supplementary duties at the import level have also seen significant increases. For instance, the duty on betel nuts has been raised from 30 percent to 45 percent, while pine nuts have seen an increase from 20 percent to 30 percent.
Similarly, fresh or dried betel nuts now carry a duty of 45 percent, up from 30 percent. In addition, supplementary duties on a wide range of products, including fruits such as mangoes, oranges, citrus fruits, grapes, lemons, papaya, watermelons, apples, and pears, have risen from 5 percent to 15 percent.
The same increase applies to fruit and vegetable juices, as well as various other goods like tobacco, paints, polymers, varnishes, soaps, detergents, fruit drinks, artificially flavored beverages, electrolyte drinks—both carbonated and non-carbonated—and cigarettes containing tobacco.
These increases are expected to significantly impact the prices of everyday goods and services, placing a greater financial burden on consumers.
The government has justified these measures as necessary for revenue generation and meeting the IMF’s conditions, but their immediate impact on the cost of living will likely be felt across all segments of society.
