ISLAMABAD: The federal government has proposed a major expansion of the sales tax regime under the Finance Bill 2026-27 by bringing 21 additional product categories under taxation based on their maximum retail price (MRP).
The proposed amendment seeks to strengthen revenue collection and improve tax compliance throughout the supply chain. Under Pakistan’s existing system, certain goods listed in the Third Schedule of the Sales Tax Act are taxed at the retail price level rather than on ex-factory or import values, ensuring tax collection at the highest point of sale.
According to tax expert Arshad Shehzad, the move is intended to reduce revenue leakages and simplify tax collection. The newly proposed categories include edible oils and fats, confectionery, pasta, sauces, dairy products, cosmetics, hair-care products, tissue paper, plastic household items, footwear, luggage, sanitary ware, insecticides, and household utensils.
If approved, the changes will significantly broaden the range of consumer goods subject to retail price-based taxation. Industry stakeholders are expected to face increased compliance requirements and may need to review pricing structures and supply chain operations to meet the new tax obligations.
