Federal Budget 2019-20: Increase in federal excise duty on cigarettes

ISLAMABAD: The Federal Budget 2019-20 unveiled by the Pakistan Tehreek-e-Insaf (PTI) government has recommended an increase in the federal excise duty (FED) on cigarettes.

Presenting the budget in the National Assembly, State Minister of Revenue Hammad Azhar said FED on cigarettes was levied on a fixed rate basis. According to the minister, the rates needed to be increased each year to account for the increase in prices.

“FED is proposed to be increased. Traditionally cigarettes are taxed in two slabs but during 2017 a third tier was introduced to attract low priced illicit market which did not yield the desired results,” said Azhar.

The upper slab will be taxed from Rs4,500 per 1,000 sticks to Rs5,200 per 1,000 sticks. For the lower slab, the existing two slabs will be merged to Rs1,650 per 1,000 sticks.

According to the minister, this proposal is to collect Rs147 billion compared to an estimated Rs114 billion for 2018-19.