The National Board of Revenue (NBR) has revised VAT and supplementary duty (SD) on nine goods and services, including mobile phone usage, internet services and medicine.

The tax authority brought down the indirect taxes two weeks after the government hiked rates of nearly 100 goods and services drawing opposition from criticisms that the spike would stoke inflation which has been staying over 9 percent since March 2023. 

In a press release today, the NBR said it has slashed VAT on ready-made clothes,  restaurants, sweets, non-AC hotels and motor workshops and mostly restored to the previous levels.

The NBR restored SD on mobile phone usage to 20 percent from 23 percent and withdrew 10 percent SD on broadband internet services.  

Read more

VAT shock in the middle of the fiscal year

Trade VAT on medicine has been restored to its previous rate of 2.4 percent, down from 3 percent. 

The VAT on restaurants has been brought back to 5 percent from 15 percent. 

However, three to five-star hotels will continue to be subject to a 15 percent VAT rate as they can claim input tax credits.  

The VAT on automobile workshop services has been kept at 10 percent following protests.

VAT on ready made clothes by branded fashion stores has been lowered to 10 percent from 15 percent. 

Buyers of non-branded clothes will require to pay 7.5 percent VAT. 

Earlier, VAT on both branded and non-branded outlets was 7.5 percent VAT.  

Read more

Govt must reverse anti-poor decisions

The VAT on sweets shop has been reduced to 10 percent, reversing the earlier hike from 7.5 percent to 15 percent.  

Non-AC hotels will now face a 10 percent VAT, down from 15 percent but higher than the earlier 7.5 percent rate.