GST expansion to raise prices of everyday goods in Pakistan

GST expansion to raise prices of everyday goods in Pakistan

Consumers across Pakistan are likely to face higher prices on a wide range of everyday products after the federal government proposed the expansion of General Sales Tax (GST) coverage in the upcoming fiscal year’s budget.

According to the Finance Bill, the government expects to generate an additional Rs70 billion in revenue by bringing several products under the Third Schedule and expanding GST collection measures.

The new tax measures will increase the cost of various essential and consumer goods, including milk, dairy products, sweets, jams, jellies, ketchup, spices, cooking oil, ghee, crockery, hair oil, shampoo, footwear, perfumes, body sprays, bakery items, plastic household products, and sanitary goods.

Several other products will also become more expensive, such as suitcases, cameras, kitchenware, travel bags, e-cigarettes, agricultural pesticides, and disinfectant products.

In addition to these measures, the government has proposed higher tax rates on luxury electric vehicles. Officials estimate that this step alone will contribute around Rs25 billion to the national exchequer.

The budget also seeks to remove the profit margin disparity between industrial and commercial importers. Authorities expect this adjustment to generate an additional Rs30 billion in tax revenue.

The government says these measures aim to strengthen revenue collection and reduce the fiscal deficit. However, consumers and businesses may face increased financial pressure as higher taxes are likely to push up the prices of many commonly used products in the coming months.