FBR Collects Rs. 329 Billion Taxes from Tobacco Sector in FY2025-26

The Federal Board of Revenue (FBR) collected Rs. 329 billion in Federal Excise Duty (FED) and General Sales Tax (GST) from Pakistan’s tobacco sector during fiscal year 2025-26, marking an increase of Rs. 45 billion compared with the Rs. 284 billion collected in the previous fiscal year.

According to official sources, the increase reflects stronger tax collection from the tobacco industry despite the continued presence of illicit cigarette sales in the market. When income tax is included, the FBR’s total tax collection from the tobacco sector reached Rs. 357 billion in FY2025-26, up from Rs. 315 billion a year earlier.

The Pakistan Tobacco Company remained the largest taxpayer in the sector, contributing Rs. 260.7 billion during the fiscal year, compared with Rs. 222 billion in FY2024-25. Philip Morris Pakistan ranked as the second largest contributor, paying approximately Rs. 52.2 billion in taxes during the year.

According to FBR officials, higher collections were supported by stricter enforcement measures, including the deployment of paramilitary personnel at Green Leaf Threshing Units, stronger collection of advance withholding taxes, action against illicit cigarette trade, and provincial crackdowns on unstamped cigarette packs.

Despite these efforts, illegal and smuggled cigarettes continue to account for nearly 45 percent of the market, resulting in an estimated annual revenue loss of around Rs. 300 billion. Officials estimate that the value of the illicit cigarette market also remains close to Rs. 300 billion.

Pakistan’s annual cigarette consumption remains stable at around 81 billion sticks. Officials say the sharp increase in Federal Excise Duty rates during FY2022-23 significantly raised the prices of tax paid cigarettes, encouraging consumers to shift toward illegal products. Although the government has kept FED rates unchanged in recent budgets and tax collection has continued to improve, the illegal market still dominates a large share of cigarette sales.

The FBR plans to further strengthen enforcement at Green Leaf Threshing Units and work more closely with provincial governments to curb the sale of unstamped cigarettes. Officials believe these measures could increase annual tax collection from the tobacco sector to between Rs. 575 billion and Rs. 600 billion in the coming years.