The federal government has increased the Federal Excise Duty (FED) on e-liquids used in electronic cigarettes from Rs. 10,000 per kg to Rs. 16,500 per kg in the latest budget measures.
The government has also removed the previously applied retail-price-based tariff of up to 65 percent.
The revision comes as part of fiscal adjustments aimed at streamlining taxation in the tobacco and nicotine product sector, which has seen rapid growth in recent years, particularly among urban youth and young adult consumers.
Previously, e-cigarette products were subject to a complex dual-tax structure, including a high ad-valorem duty linked to retail prices, which authorities said created pricing distortions and encouraged under-invoicing.
With the new fixed FED regime, the government aims to simplify tax collection while ensuring higher revenue generation from a fast-expanding alternative tobacco market.
The move is also intended to align taxation more closely with conventional tobacco products under a uniform excise framework.