Govt Takes Back FED Increase on Cigarettes Within a Month of Announcing It

The government has made another u-turn on its notification regarding the enhancement of federal excise duty (FED) on the tobacco industry.

The Federal Board of Revenue (FBR) on issued a notification on Tuesday in which it stated that The Federal Board of Revenue is pleased to rescind its notification SRO 1150(1)/2018, dated September 2018.

Federal Board of Revenue (FBR) in September had notified up to 46% increase in Federal Excise Duty (FED) on locally produced cigarettes.

According to the previous notification, these were the Federal excise duties that were imposed on the tobacco industry.

Retail Price	Rate of Federal Excise Duty
Locally produced cigarettes if their on-pack printed retail price exceeds Rs 4500 per thousand cigarettes	Rs 4500 per thousand Cigarettes
Locally produced cigarettes if their on-pack printed retail price exceeds Rs 2925 per thousand cigarettes but not exceed Rs 4500 per thousand cigarettes	Rs 1840 per thousand Cigarettes
Locally produced cigarettes, if their on-pack printed retail price does not exceed Rs 2925 per thousand cigarettes.	Rs 1250 per thousand Cigarettes

 

An increase in revenue collection of the Federal Board of Revenue (FBR) from tobacco sector has been witnessed during last three fiscal years after introduction of third slab of FED on cigarettes from Rs 111 billion in 2015-16, Rs 74 billion in 2016-17 and now Rs 89 billion during 2017-18.

The FBR data revealed that the FED/sales tax collection had recorded an increase up to financial year 2015-16 (Rs 111 billion) before registering a sharp decline for the first time in many years in 2016-17 (Rs 74 billion).