The National Board of Revenue (NBR) has withdrawn its recent decision to increase Value Added Tax (VAT) on several goods and services, including medicine, restaurants, and mobile services. This decision was announced on Wednesday, January 22, through four separate notifications issued by the NBR.

According to Al-Amin Sheikh, the NBR's Public Relations Officer, the government initially aimed to strengthen the country’s financial foundation by issuing the "Value Added Tax and Supplementary Duty (Amendment) Ordinance 2025" and "The Excise and Salt Act (Amendment) Ordinance, 2025" on January 9. As part of this initiative, the NBR revised VAT, supplementary duties, and excise duty rates for various goods and services. However, after considering appeals from professional associations, civil society, and stakeholders, the NBR decided to lower VAT rates, source-based VAT collection rates, and supplementary duty rates for the greater interest of the public.

Earlier, on January 9, the government had increased VAT and duties on more than 100 goods and services. For instance, VAT on workshop services was raised from 10% to 15%. However, following backlash, the NBR announced on January 20 that the increased VAT on workshop services would be rolled back.

Similarly, the decision to increase VAT on restaurant services was reversed. On January 9, the VAT rate for restaurant services was raised from 5% to 15%. Restaurant owners strongly opposed the move, and as a result, the NBR reinstated the previous VAT rate of 5%.

In addition, the increased VAT rates on mobile phone services, internet services, and medicine stores were also withdrawn. The NBR confirmed that e-books would remain exempt from VAT. This rollback comes as a response to widespread protests and concerns from various sectors about the impact of the higher VAT rates on essential services.