The federal government is likely to review a decision with regard to the imposition of Federal Excise Duty (FED) on cigarettes due to a shortfall of Rs. 65 billion from the tobacco sector during the outgoing fiscal year 2022-23.

Sources told ProPakistani that the Finance Minister Ishaq Dar, at the request of the Tobacco industry will announce to decrease in FED rates on cigarettes during a winding-up speech in the lower house of Parliament.

The Tobacco industry has asked the Finance minister to reduce FED on cigarettes by 30 percent giving the reason as this will increase revenue from the Tobacco sector to Rs. 360 billion in the next fiscal year 2023-24.

Sources said that FBR has estimated to collect Rs. 175 billion in revenue against the target of Rs240 billion from the Tobacco sector during this year.

The shortfall of approximately Rs. 65 billion from the Tobacco sector during this year is attributed due to the sudden hike in FED in February this year.

Sources said that tax evasion in the tobacco industry is costing Rs280 billion in Pakistan’s economy.

FBR can collect Rs. 520 billion in revenue from the Tobacco sector with aggressive enforcement against smuggled as well as non-duty paid cigarettes but also implementation of a Track and Trace system, sources added.

Sources said that there is also a need to improve tax administration as only two companies, Pakistan Tobacco Company (PTC) and Philip Morris have applied for the implementation of the FED license regime.

Source: Pro Pakistani