The National Board of Revenue has revised its tax policies, reducing value added tax and supplementary duty on several items and services, including mobile phone usage, broadband internet, medicine, ready-made clothes, restaurants, sweets, non-AC hotels, and motor workshops.
The revisions came just two weeks after tax hikes on nearly 100 items, following widespread criticism and concerns over inflation, which has remained above 9 per cent since March 2023.
The NBR on Wednesday issued four circulars in this regard.
In response to protests, the supplementary duty on mobile phone usage has been restored to 20 per cent from 23 per cent, and the 10 per cent SD on broadband internet services has been removed entirely.
Trade VAT on medicine has been reduced to its earlier rate of 2.4 per cent from the recently increased 3 per cent.
For restaurants, the VAT has been brought back to 5 per cent from 15 per cent. Three to five-star hotels, however, will still be charged 15 per cent VAT.
VAT on automobile workshops was restored to the previous rate at 10 per cent.
For branded fashion stores selling ready-made clothes, the VAT has been cut to 10 per cent from 15 per cent, while buyers of non-branded clothes will continue to pay a 7.5 per cent VAT.
Previously, both branded and non-branded clothing outlets were subject to a uniform 7.5 per cent VAT rate.
Sweets shops now face a reduced VAT of 10 per cent, reversing an earlier hike from 7.5 per cent to 15 per cent.
Non-AC hotels will be charged a 10 per cent VAT, lower than the proposed 15 per cent but still higher than the earlier 7.5 per cent rate.
The NBR on January 9 increased VAT and duties on more than 100 goods and services through an ordinance to meet the conditions of the International Monetary Fund.
The interim government faced widespread criticism for its decision to suddenly increase VAT on a large number of goods and services at a time of high inflation.
Various business organisations also protested and expressed concerns at the decision to increase VAT and duties saying that it will increase sufferings for both the ordinary people and the businesses.
In a press release on Wednesday, the revenue authority said that it reduced VAT and duties on several items considering the requests of various professional organisations, civil society and stakeholders, and in the larger public interest.