Concessionary GST Likely to Terminate on Several Items in Next Federal Budget; Price Hike Feared

(Digital Itla) The federal government is likely to review tax incentives and concessionary sales tax rates extended to various sectors in the upcoming budget, which may result in the termination of the concessionary General Sales Tax (GST). According to sources, the government is considering the introduction of new fiscal reforms to expand the tax net and boost revenue. In this regard, a proposal to gradually phase out various tax incentives granted under the Eighth Schedule is under consideration.

Sources state that a proposal to increase sales tax on imported computers and laptops has been put forward, while a decision to either retain or withdraw tax incentives for electric and hybrid vehicles is also expected in the budget. Regarding the agriculture sector, proposals to reduce or completely eliminate tax concessions on tractors and DAP fertilizer are under review. Similarly, a recommendation has been made to increase the sales tax rate on poultry and livestock feed. Changes are also expected in the tax policy for raw materials used in pharmaceutical manufacturing, alongside a review of withdrawing the existing tax facility for solar photovoltaic cells. Furthermore, tax concessions on stationery and certain basic food items are likely to be reduced or removed. Sources added that the government is transitioning toward a uniform tax regime instead of preferential tax incentives. These measures are expected to be part of the policy under the IMF program aimed at reducing tax exemptions and concessions. On the other hand, experts warn that if these proposed measures are integrated into the budget, the prices of numerous products could rise significantly.