The prices of packaged milk and other essential items in Pakistan are set to rise following the government’s decision to impose an 18 per cent General Sales Tax (GST) in the Budget 2024-25, effective from July 1.
The National Assembly (NA) approved the Federal Budget for the fiscal year 2024-25 today, which includes this new tax measure.
Along with packaged milk, the 18 per cent GST will also be applied to herbal and homeopathic medicines, and food items such as branded flour, packaged rice, and lentils. The sales tax will additionally extend to charitable and welfare hospitals.
Despite the Senate Standing Committee on Finance rejecting the proposal, the government has moved forward with the decision. This move is anticipated to increase the cost of living, particularly affecting low-income families who rely on these essential goods.
The approval of the Federal Budget comes amidst rising concerns over inflation. Reports indicate that the International Monetary Fund (IMF) has urged Pakistan to further reduce sales tax exemptions, which is likely to contribute to the inflationary trend in the coming fiscal year. Consequently, the prices of milk, tea, sugar, rice, and flour are expected to rise.
The National Assembly passed the Finance Bill, 2024, following a clause-by-clause reading and amendments process.
All amendments proposed by opposition members were rejected. Minister for Finance and Revenue Muhammad Aurangzeb presented the motion for the consideration of the Finance Bill, which was passed by a majority vote.
The budget has a total outlay of Rs18,870 billion and aims to address various economic challenges facing the country.
However, the imposition of the 18 per cent GST on essential items is likely to put additional financial pressure on the population, raising concerns about the affordability of basic necessities for many Pakistanis.
