In a move to comply with the International Monetary Fund (IMF) for the renewal of the bailout program, the government has imposed new taxation measures totaling Rs115 billion.
After President Dr. Arif Alvi refused to issue an executive order to release a mini-budget, the the Shehbaz Sharif administration moved swiftly and got the consent of the federal cabinet for the money bill.
Following the announcement, the cabinet convened under the Prime Minister Shehbaz Sharif. It was decided to impose taxes totaling Rs115–116 billion via an SRO by the FBR, with the remaining taxation measures totaling Rs55 billion to be introduced via a money bill before Parliament.
Following cabinet approval of the Tax Laws Amendment Bill 2023, the FBR issued the Statutory Regulatory Order (SRO) increasing the General Sales Tax (GST) rate from the standard 17 to 18 percent and increasing the Federal Excise Duty (FED) on cigarettes to raise an additional Rs115 billion out of the Rs170 billion the government agreed to meet IMF requirements.
According to the media reports, the administration has also approved a 25% GST on hundreds of high-end luxury items, which would be enforced through the Tax Amendment Bill 2023, which will be brought to the Parliament on Wednesday (today).
To boost the price of imports, the FBR doubled the GST rate on all previously disallowed luxury products by the Ministry of Commerce. In addition, on enhanced GST rate has also been proposed for some locally produced luxury goods.
The government gave up because the Washington-based lender fought vigorously against the imposition of the Flood Levy.
