The federal government is gearing up to broaden the list of luxury goods and impose a steeper sales tax on them in the upcoming Budget 2025-26.

According to sources, a 25 percent sales tax is expected to be levied on both the import and local supply of these newly added luxury items. The move will be formalized by amending SRO 297(I)/2023 through the Finance Bill 2025.

Officials revealed that a new, separate schedule may also be introduced into the Sales Tax Act to cement these changes.

The expanded list is likely to include additional home appliances, high-end tiles and wallpapers, and luxury watches. The initiative is part of the government’s strategy to boost revenue collection and offset expected losses from reductions in customs duty, regulatory duty, and additional customs duty.

Currently, the luxury goods list already covers items such as aircraft, ships, jewelry, cosmetics, cigarettes, expensive mobile phones, imported food items, decorative products, and certain vehicles.