The Federal Board of Revenue (FBR) has introduced a new tier/slab for enhancement in rates of Federal Excise Duty (FED) on cigarettes, making duty structure under three tiers. According to experts, FED has been charged on cigarettes on the basis of specific rates for two tiers since 2014. In order to arrest the declining revenue trends and curb the menace of illicit low-priced cigarettes of inferior quality, a new tier is being introduced to make a three-tier duty structure.
The three tiers revealed that where locally produced cigarettes if their on pack printed retail price exceeds four thousand five hundred rupees per thousand cigarettes, FED would be applicable of rupees three thousand seven hundred and forty per thousand cigarettes.
Where locally produced cigarettes if their on pack printed retail price exceeds two thousand nine hundred and twenty five rupees per thousand cigarettes but does not exceed four thousand five hundred rupees per thousand cigarettes, the FED would be rupees one thousand six hundred and seventy per thousand cigarettes.
Where locally produced cigarettes if their on pack printed retail price does not exceed two thousand nine hundred and twenty-five rupees per thousand cigarettes, FED would be rupees eight hundred per thousand cigarettes. Under another amendment, any person who manufactures, possesses, transports, distributes, stores or sells cigarette packs without, or with counterfeited, tax stamps, banderoles, stickers, labels or barcodes, such cigarette stock shall be liable to outright confiscation and destruction. Any person committing the offence shall pay a penalty of Rs 25,000 or 100 per cent of the amount of tax involved, whichever is higher. He shall, further be liable, upon conviction by a special judge, to imprisonment for a term which may extend to five years, or with additional fine which may extend to an amount equal to the loss of tax involved, or with both.
In case of transport of cigarettes without, or with counterfeited, tax stamps, banderoles, stickers, labels or barcodes, there will be permanent seizure of the vehicle used for transportation of non-conforming or counterfeit cigarette packs. In case of repeat sale of cigarettes without or with counterfeited, tax stamps, banderoles, stickers, labels or barcodes, the premises used for such sale be sealed for a period not exceeding 15 days, Finance Bill 2017 said.
Finance Bill 2017 proposes to insert a new section, whereby, Pakistan Tobacco Board, at the time of collecting cess on tobacco, directly or indirectly, shall collect advance tax at the rate of five percent of the purchase value of tobacco from every person purchasing tobacco including manufacturers of cigarettes. The tax so collected will be adjustable. The government has also created a separate PCT code (20 per cent customs duty) for classification of electric cigarettes.
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