ISLAMABAD – Budget 2025 is set to be unveiled in next two weeks, and several items are likely to get expensive under new proposals as government is pushing to boost revenue.
As per recent reports, government is set to impose 25pc sales tax on range of new luxury items including high-end home appliances, premium tiles and wallpapers, and luxury wristwatches—as part of its upcoming Budget.
The measure, aimed at boosting tax revenue, and a new schedule may also be added to the Sales Tax Act to formalize and clearly outline the revised list of taxable luxury goods.
According to sources, the expansion of luxury tax list is part of the government’s broader fiscal strategy to compensate for expected losses resulting from planned reductions in customs duty, regulatory duty, and additional customs duty. By targeting non-essential, high-end items, officials hope to increase indirect tax collection without directly burdening essential consumption.
The current list of luxury goods already includes aircraft, ships, expensive mobile phones, cosmetics, jewelry, cigarettes, imported food items, and specific categories of vehicles and decorative products.
With the inclusion of upscale household items and designer décor in the revised list, consumers may see significant price increases on items such as imported refrigerators, ovens, decorative tiles, luxury wallpapers, and premium watch brands after the budget is passed.
Pakistani government is also considering implementing 5pc Federal Excise Duty (FED) on wide range of ultra-processed food products to raise Rs. 250 billion.
Among the items likely to be taxed are sodas, frozen foods, instant noodles, chips, biscuits, ice cream, frozen meats, sauces, ready-made meals, sausages, and various other processed food products. Officials have noted that this proposed duty is part of efforts to significantly boost the country’s revenue collection in the next fiscal year.
Expected new Capital Gains Tax rate on property sales in Budget 2025-26
