Pakistan Budget 2025-26: Essential Items Set to Become More Expensive

The newly presented federal budget for 2025-26 brings significant price hikes across multiple sectors, with essential commodities, fuel, electronics, and vehicles set to become notably more expensive due to new taxation measures.

Key Price Increases

Petroleum & Fuel

• Petroleum levy increased by up to Rs. 80 per litre on diesel and petrol
• High Octane & E-10 Petrol prices to rise from Rs. 50 to Rs. 75 per litre
• 6% General Sales Charge (GSC) imposed on all petroleum products

Imported Electronics & Vehicles

• 10% Sales Tax on imported laptops, PCs, and electronics
• Higher Withholding Tax on premium smartphones (18% GST + 25% PTA levy for devices over $500)
• End of duty concessions for hybrid, electric, and luxury imported vehicles

Food & Essential Items

• 10% Sales Tax on bakery items (vermicelli, buns, rusks), poultry feed, books, and newsprint
• Federal Excise Duty (FED) increased on:
• Sugar: Rs. 15/kg
• Cement: Rs. 2 to Rs. 3 per kg
• Additional taxes on UHT milk, ghee, cooking oil, and flour
• 5% Withholding Tax on flour mills, likely increasing flour prices
• Tax exemptions removed on imported fruits (fresh & dried)

Consumer & Textile Goods

• GST increased to 18% for branded leather and textile retailers
• 10% Sales Tax on stationery, newsprint, and books
• Higher taxes on cosmetics (soaps, shampoos, perfumes)

Agricultural Inputs

• 10% Sales Tax on local poultry and cattle feed
• 15% GST on fertilizers, seeds, and tractors

Other Major Tax Changes

• Sales Tax on locally made vehicles raised from 12.5% to 18%
• Tax exemptions for FATA ended, now subject to 12% tax
• New taxes on freelancers & digital income, including foreign earnings
• Capital Gains Tax on real estate increased
• Excise Duty on real estate likely to be removed
• Super Tax on large companies may see slight reduction
• Tax relief for construction sector, including lower withholding tax on imported raw materials
• Customs Duty on select imports may decrease by 2-3%

Mixed Impact on Economy

While the budget provides relief to certain sectors like construction and local industries, it imposes a heavier burden on consumers through increased prices of daily essentials, fuel, and imported goods. Economists predict a ripple effect in market prices nationwide in the coming weeks.

“The budget attempts to balance fiscal consolidation with economic growth, but middle and lower-income households will feel the pinch,” said financial analyst Mehreen Ahmed.

What This Means for O Consumers

• Higher transportation costs due to fuel price hikes
• Increased grocery bills as food items become more expensive
• Costlier electronics and vehicles, particularly imported ones
• Additional tax burden on freelancers and digital earners

The government maintains that these measures are necessary to boost revenue and reduce the fiscal deficit, but critics argue they will exacerbate inflation and living costs for ordinary citizens.