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Government Chooses to Keep General Sales Tax Rate Unchanged in New Budget

The proposal to increase the sales tax rate from 18 percent to 19 percent has been shelved and will not be included in the upcoming Finance Bill 2024 due to concerns over its inflationary impact on the general public.

The sales tax rate is expected to remain at 18 percent in the budget for the fiscal year 2024-25.

The Federal Board of Revenue (FBR) had recommended a 1 percent increase in the sales tax rate, projecting that it would generate an additional Rs. 40-50 billion in revenue for the fiscal year 2024-25. However, Prime Minister Shehbaz Sharif rejected this proposal, emphasizing the potential for immediate inflationary effects on the general public.

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The proposal to raise the sales tax rate from 18 to 19 percent was revisited in discussions between the FBR and top government officials. Once again, the government rejected the proposal, deciding to maintain the 18 percent sales tax rate for the next fiscal year (2024-25).

Prime Minister Shehbaz Sharif has firmly declined the suggestion to increase the standard sales tax rate from 18 to 19 percent.

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