The government plans to broaden the list of luxury items subject to a 25 percent sales tax on imports and local sales in the upcoming 2025-26 federal budget, Business Recorder reported. This move will either amend SRO 297(I)/2023 or introduce a new schedule under the Sales Tax Act through the Finance Bill 2026.
The expanded list will include additional home appliances, tiles, wallpapers, high-end wristwatches, and other items. The measure aims to generate revenue and offset losses from reduced customs duties, regulatory duties, and Additional Customs Duties (ADCs) expected in the new budget.
Currently, under SRO 297(I)/2023, the Federal Board of Revenue (FBR) imposes a 25% sales tax on luxury goods such as aircraft, ships, jewelry, cosmetics, cigarettes, premium mobile phones, imported food, decorative items, select vehicles, and other high-end products. This represents an increase from the previous 17% rate, covering 33 categories and 860 customs tariff lines.
The regulation mandates that sales tax be charged and paid at 25 percent of the import value or retail price for the specified goods during import and subsequent supply stages.
