FBR Collects Rs357 Billion From Tobacco Sector

The Federal Board of Revenue (FBR) collected Rs357 billion in federal excise duty, general sales tax, and income tax from Pakistan’s tobacco sector during FY2025-26, up from Rs315 billion recorded in the previous fiscal year, according to The News.

Official sources said revenue from federal excise duty and general sales tax alone rose by Rs45 billion, reaching Rs329 billion compared with Rs284 billion in FY2024-25.

Pakistan Tobacco Company remained the industry's largest taxpayer, contributing Rs260.7 billion during the fiscal year ending June 30, 2026, compared with Rs222 billion in the preceding year.

Philip Morris (Pakistan) ranked as the second-largest contributor, paying nearly Rs52.2 billion in taxes to the national treasury during FY2025-26.

According to FBR officials, the increase in tax collection was driven by the deployment of paramilitary personnel at Green Leaf Threshing Units, implementation of advance withholding taxes, intensified action against illegal tobacco trade, and provincial police crackdowns on unstamped cigarette packs.

Despite these enforcement efforts, illicit and smuggled cigarettes still account for nearly 45% of Pakistan’s cigarette market, resulting in an estimated annual revenue loss of around Rs300 billion.

Sources added that annual cigarette consumption remains steady at approximately 81 billion sticks, showing no noticeable decline.

The market share of illicit and smuggled cigarettes expanded after the federal excise duty was increased by 200% during FY2022-23, significantly raising the prices of legally taxed cigarette products.

Although the government has kept the excise duty unchanged in recent budgets and tax collections from the sector have continued to increase, illegal and smuggled cigarettes continue to dominate the market.

The FBR is expected to further strengthen monitoring at Green Leaf Threshing Units and improve coordination with provincial governments to curb the sale of unstamped cigarettes and unlock the sector’s estimated annual revenue potential of Rs575 billion to Rs600 billion.