ISLAMABAD: Prime Minister Shehbaz Sharif-led federal cabinet on Tuesday approved the imposition of a 25 per cent sales tax on luxury items, fulfilling another condition set by the International Monetary Fund (IMF) for the revival $7 billion Extended Fund Facility (EFF) stalled for months, Pak Revenue News reported quoting sources.
The cabinet approved a 25pc general sales tax (GST) on luxury items through a circulation summary. A formal notification will be issued by the Federal Board of Revenue in the coming days,
The summary approval was taken from the circulation for the notification of 25 pcs ST from the federal cabinet. The Federal Board of Revenue (FBR) will now issue a notification and the new rate will be applicable from March 1.
The items on which 25pc GST was imposed included aerated water and juices, imported cars, mobile phones, cat and dog food, sanitary and bathroom wares, carpets (excluding Afghanistan), chandeliers and lighting devices or equipment, chocolates, cigarettes, confectionary items, corn flakes etc, cosmetics, shaving items, tissue papers, crockery, decoration/ornamental devices, doors and window frames, fish, footwear, fruits and dry fruits, furniture, homes appliances (CBU), luxury leather jackets and apparels, mattress and sleeping bags, frozen or processed meat, mobile phone (CBU), musical instruments, arms and ammunition, shampoos, sun glasses, tomato ketchup and sauces, travelling bags and suitcases.
The federal government also slapped a 25 percent GST rate on locally manufactured luxury vehicles of 1,400cc and above.
The FBR has estimated that it will collect Rs15 billion in additional taxes through an enhanced GST rate of 25 percent in the four-month period.
“IMF satisfied with measures
According to sources, Pakistan and IMF held virtual negotiations on Monday to revive the loan program – stalled for months.
During the meeting, the lender expressed satisfaction over the country’s measures, while Pakistan insisted for early finalisation of the staff-level agreement.
Sources claimed that the State Bank of Pakistan (SBP) apprised IMF representatives about the estimated collection of foreign exchange reserves of $10 billion till June. “Pakistan has also achieved future targets prior to the staff level agreement”, they added.
It is pertinent to mention here that the government has accelerated implementing IMF demands to unlock the loan tranche for the revival of country’s economy.