Government removes Federal Excise Duty on Cigarettes

The government withdraws from the Federal Excise Duty (FED) imposed on cigarettes within a month of notifications.

The Federal Board of Revenue (FBR) has issued a new notification on Tuesday, the notification states that the tax department has revoked the previous notification SRO 1150(1)/2018, dated September 2018.

The notification further states that FED has been enhanced to Rs45,00 on locally produced cigarettes, however, it is conditional that printed retail price exceeds Rs45,00 per 1000 cigarettes.

FBR will impose Rs182 billion in additional customs and regulatory taxes

Similarly, if the retail printed price for locally produced cigarettes exceeds Rs2,925 per 1000 cigarettes but doesn’t exceed Rs4,500 per 1000 cigarettes the FED would be increased to Rs1,840.

Also, if the printed retail price of locally produced cigarettes doesn’t exceed Rs2,925 per 1000 cigarettes the FED on those cigarettes would be increased to Rs1,250.

By revising the FED the tax department estimated the revenue of Rs26 billion, the impact of FED on the prices of 20-pack cigarettes would be Rs12.5 for tier-1 brands and Rs11 for tier-3 brands. However, for tier-2 brands, the prices would be increased by 7 paisas only.

The previous PLMN government has also increased FED on tobacco by Rs3,970 on tier-1 brands and Rs1,176 on tier-2 brand while Rs854 on tier-3 brands.

However, before the supplementary budget, tobacco companies (multinationals) lobbied for retaining the tier-3 system and local companies demanded to remove the tier-3 system.

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