FED Collection From Cigarettes & Food Concentrates Jumped Due to Inflation Only

A major jump in the Federal Excise Duty (FED) collection during 2021-22 from cigarettes and concentrates used in beverages/food is only due to inflation, but not improved compliance from these sectors.

The FBR performance report for 2021-22 stated that a substantial jump in cigarettes, and concentrates used in beverages/food is attributed to inflation and a huge increase in FED collection from air travel is the post-covid positive impact on air travel during FY 2021-22 due to easing down of travel restriction.

The net collection from FED increased by 15.7 percent during FY 2021-22. In absolute terms, this increase translates into Rs. 43.6 billion additional FED was collected as compared to the previous fiscal year. The share of FED in total FBR collection is 5.2 percent. Major sectors which contribute to FED revenues are cigarettes, cement, natural gas and services. The natural gas, POL Products and LPG went down, however other sectors grew positively during FY 2021-22.

The share of top sectors is about 89 percent, as evident from the following table (Table 16). The cigarette is the top contributor with 36.6 percent share, followed by cement with 22.9 percent and concentrates 7.2 percent share, FBR added.

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