Islamabad: Giving in to the demand put forth by the International Monetary Fund (IMF), the federal government on Tuesday increased the General Sales Tax (GST) to 18%, previously 17%, effective immediately from February 15, 2023.
At the same time, the federal government enhanced taxes on cigarettes with immediate effect to collect Rs115 billion out of the planned Rs170 billion mini-budget.
Under the chair of Prime Minister Shehbaz Sharif, the federal cabinet Tuesday approved the Finance Supplementary Bill 2023 to implement another condition set by the global lender for the revival of the derailed $6.5 billion program after President Arif Alvi refused to promulgate it via an ordinance.
After getting approval from the federal cabinet on a mini-budget in the shape of the Tax Laws Amendment Bill 2023, the Federal Board of Revenue (FBR) issued the Statutory Regulatory Order (SRO) for hiking the GST rate from standard 17% to 18% and increasing the Federal Excise Duty (FED) on cigarettes.
The FBR notified to increase the FED on expensive brands from Rs6.5 per cigarette to Rs16.5 – an increase of 153%. For less expensive brands, the per stick increase is from Rs2.55 to Rs5.05 – an increase of 98%.
The government had presented the draft bill to the federal cabinet, which would now be presented in parliament on Wednesday (today) for approval.
Finance Minister Dar briefs President Alvi on ongoing talks with IMF
Finance Minister Ishaq Dar said that the federal cabinet had the authority to increase the GST rate while the FBR could also enhance the FED rate on cigarettes on its own.
In order to provide permanent legal cover to the immediately notified Rs115 billion tax measures as part of the mini-budget, the government also convened separate sessions of the National Assembly and the Senate on Wednesday (today).