ISLAMABAD: The federal government is considering the withdrawal of reduced General Sales Tax (GST) rates and various tax concessions in the upcoming budget, a move that could lead to higher prices for a wide range of products and services.
According to sources, the government is reviewing tax incentives and reduced sales tax rates granted to different sectors as part of broader fiscal reforms aimed at expanding the tax base and increasing revenue collection. The proposed changes may include the gradual elimination of several exemptions and concessions currently available under the Eighth Schedule.
Sources said a proposal is under consideration to increase sales tax on imported computers and laptops. The government is also expected to decide whether tax incentives currently available for electric and hybrid vehicles will be retained or withdrawn.
In the agricultural sector, tax relief on tractors and DAP fertilizer may be reduced or completely abolished. Recommendations have also been made to increase the sales tax rate on poultry and livestock feed.
Changes to the tax policy on raw materials used in pharmaceutical manufacturing are also being considered. In addition, the government may withdraw existing tax concessions on solar photovoltaic cells.
Tax relief available on stationery items and certain essential food products could also be reduced or eliminated. Officials say the government is moving toward a more uniform taxation system instead of sector-specific preferential tax treatment.
The proposed measures are believed to be in line with commitments under the International Monetary Fund (IMF) program, which encourages the reduction of tax exemptions and concessions.
Economic experts warn that if these proposals are included in the federal budget, consumers may face price increases across multiple sectors. Key decisions regarding sales tax policy and the future of tax incentives are expected when the budget is unveiled.
