Karachi, June 14, 2024 – The Sindh government announced the provincial budget for 2024-25 on Friday, revealing an increase in the sales tax rate from 13% to 15%.
Sindh Chief Minister Syed Murad Ali Shah, in his budget speech to the provincial Assembly, explained that the new sales tax rate is intended to align with other Service Tax Administrations in Pakistan. The increase is part of broader efforts to harmonize tax rates across the country.
The Chief Minister noted that while the standard rate of the Sindh Sales Tax (SST) will rise by 2%, existing exemptions and reduced rates will remain in effect. This means that services currently enjoying lower tax rates or exemptions will not be affected by the increase.
One significant proposal in the budget is to promote digital payments. To encourage the use of digital means such as debit and credit cards, mobile wallets, and QR scanning, the government plans to reduce the SST rate for restaurant services to 8% when customers pay through these methods.
The budget also includes measures to support the telecom sector. Currently, telecom services are taxed at a high rate of 19.5% SST, while they use inputs taxed up to 18% by the federal government. The Sindh government proposes allowing telecom companies to claim an input tax credit of up to 18%, an increase from the current 17%.
Chief Minister Shah emphasized that these changes aim to boost digitalization in the economy and provide some relief to sectors facing high tax burdens. The increase in the standard sales tax rate is expected to generate additional revenue for the province, supporting various development projects and public services.
The budget for 2024-25 reflects the Sindh government’s commitment to modernizing the tax system and promoting economic growth through digital means and fairer tax policies. The proposed changes will come into effect with the new fiscal year, pending approval by the provincial Assembly.
