FBR considering jacking up GST on second-hand clothing, footwear, DAP fertiliser

ISLAMABAD: The Federal Board of Revenue (FBR) is considering jacking up General Sales Tax (GST) rate on secondhand and worn clothing and footwear, natural gas supplied to fertiliser plants, DAP fertiliser, and some other items in the budget for 2025-26.

Reduced GST rate is applied to certain specified items, and in the budget-making process the FBR is considering increasing the tax rate from 5 to 10 per cent in the upcoming budget.

Different tax proposals for the upcoming budget will be finalised during the IMF mission visit scheduled to be held from May 14 to 22. It is not yet known whether this scheduled visit of the IMF will remain intact or may be converted virtually.

Natural gas, if supplied to fertiliser plants for use as feedstock in the manufacturing of fertiliser, is taxed at 5 per cent, so there is a proposal to increase it up to 10 per cent in the next budget.

Phosphoric acid, if imported by a fertiliser company for the manufacturing of DAP, is charged a tax rate of 5 per cent and this may be increased to 10 per cent.

Cinematographic equipment imported during the period commencing on the 1st day of July, 2018 and ending on the 30th day of June, 2023 is charged GST at the rate of 5 per cent and it may be considered to be increased by up to 10 per cent.

On motorcars, there is a GST rate of 12.5 per cent on locally manufactured or assembled motorcars of cylinder capacity up to 850cc. The government is considering to increase it up to 15 per cent. On locally manufactured hybrid electric vehicles till 30th June, 2026 up to 1800cc and from 1801cc to 2500cc, the tax rate is 8.5 per cent and 12.75 per cent, respectively, and it may be increased slightly.

On supply of locally manufactured articles of jewellery, or parts thereof, of precious metal or of metal clad with precious metal, 3 per cent GST is charged. It will be considered for jacking up in the next budget.

On electric vehicle in CBU condition of 50kwh battery or below the tax rate is 12.5 per cent. On EV transport buses of 25 seats or more in CBU condition, the tax rate stands at 1 per cent, and this rate will be increased.

On substances registered as drugs under the Drugs Act, 1976, 1 per cent tax is charged. On raw materials for the basic manufacture of pharmaceutical active ingredients and for manufacture of pharmaceutical products, the tax rate is proposed to be increased in the coming fiscal year.

On DAP fertiliser, the reduced GST rate is 5 per cent, which may be increased to 10 per cent.

Certain items, including various stationery items, having 10 per cent GST rate at the moment, may see an increased tax in the next budget.