Govt to Expand Luxury Goods List And Impose 25% Sales Tax On Them in FY26 Budget

The federal government is preparing to expand the list of luxury goods and levy a higher tax on them in the upcoming Budget 2025-26,  sources within the Federal Board of Revenue (FBR) informed ProPakistani. A sales tax of 25 percent is expected to be imposed on both the import and local supply of these additional luxury items. This measure will be implemented by amending SRO 297(I)/2023 through the Finance Bill 2025. Sources added that a new, separate schedule may also be introduced into the Sales Tax Act to formalize this change. The expanded list is likely to include more home appliances, high-end tiles and wallpapers, and luxury watches. Officials confirmed that this initiative is aimed at enhancing revenue collection and compensating for anticipated losses due to reductions in customs duty, regulatory duty, and additional customs duty. The current list of luxury goods already covers aircraft, ships, jewelry, cosmetics, cigarettes, expensive mobile phones, imported food items, decorative products, and specific types of vehicles.