Islamabad, May 21, 2025: In a bid to boost revenue ahead of Budget 2025-26, the federal government is planning to broaden the list of luxury goods subject to high taxation, insiders at the Federal Board of Revenue (FBR) revealed.
This move comes amid efforts to offset expected declines in revenue due to reduced customs and regulatory duties.
According to FBR sources, a 25% sales tax will likely be levied on both imports and locally produced luxury items. This tax hike will be enforced through changes to SRO 297(I)/2023, included in the upcoming Finance Bill 2025. A separate schedule in the Sales Tax Act is also on the table to legally formalize these updates.
The expanded list of taxable luxury goods may now include high-end home appliances, premium tiles and wallpapers, and luxury wristwatches, all of which are considered non-essential imports that strain the country’s foreign exchange reserves. A senior official confirmed, “The intent is to widen the luxury tax net without harming essential sectors or local industries.”
Currently, Pakistan’s luxury goods list already includes items such as aircraft, ships, jewelry, cosmetics, cigarettes, high-end mobile phones, imported food products, decorative accessories, and specific categories of vehicles.
Read More: IMF Regional Director to Visit Pakistan for Budget Talks
Experts believe this revision could bring in much-needed funds to bridge the fiscal gap while discouraging the import of non-essential goods. Compared to regional economies, Pakistan’s taxation on luxury imports has remained relatively lenient—something the government now appears eager to change.
Read More: Pakistan Economy Hits $400B with 2.68% Growth in FY25
As the Budget 2025-26 approaches, all eyes will be on how these proposed measures shape up and their potential impact on consumer behavior and market dynamics.
