Facing widespread backlash, the National Board of Revenue (NBR) has rolled back recent tax increases on nine essential goods and services, including medicines, mobile phone usage, internet services and restaurants.

The revisions come just 13 days after controversial hikes affecting nearly 90 products and services

NBR on Wednesday revised value-added tax (VAT) and supplementary duty (SD) rates on nine goods and services, including mobile phone usage, internet services, and medicines.

In a press release issued today, the NBR announced reductions in VAT on items such as ready-made clothes, restaurants, sweets, non-AC hotels and motor workshops, largely reverting to previous rates.

Notably, the SD on mobile phone usage has been reduced from 23 per cent to 20 per cent, while the 10 per cent SD on broadband internet services has been fully withdrawn.

The trade VAT on medicines has been rolled back to its earlier rate of 2.4 per cent, down from the increased rate of 3 per cent.

The VAT for restaurants has been slashed significantly, returning to 5 per cent from the recently imposed 15 per cent.

However, three to five-star hotels will continue to face a 15 per cent VAT rate as they are eligible for input tax credits.

Motor workshop services have seen a VAT reduction to 10 per cent, addressing protests from the sector, although this is an increase from the earlier 5 per cent rate.

VAT on ready-made clothes sold by branded fashion stores has been cut to 10 per cent from 15 per cent, while buyers of non-branded clothing will now pay 7.5 per cent VAT. Previously, both branded and non-branded outlets were subject to a uniform 7.5 per cent VAT.

Sweet shops will now face a 10 per cent VAT rate, reversing the earlier hike to 15 per cent from 7.5 per cent.

Non-AC hotels will be subject to a 10 per cent VAT, reduced from the previous 15 per cent but higher than the earlier rate of 7.5 per cent.

The NBR’s move appears aimed at alleviating public and business concerns while balancing fiscal goals amidst persistent inflationary pressures.