The Federal Board of Revenue (FBR) has decided to raise Federal Excise Duty (FED) on cigarettes in the upcoming budget (2016-17) to generate Rs 15 billion from the cigarette manufacturers. According to sources, the FED is applicable on cigarettes at Rs 1,420 and Rs 3,155 per 1000 sticks for lower and upper tiers respectively. Ministry of Health has proposed FED for lower tier @ Rs 2200 per thousand cigarettes. The FBR has proposed enhancement in the rate of the FED for lower tier to Rs 1,630 per thousand cigarettes and Rs 3,620 per thousand cigarettes for upper tier.
Under the proposed slabs of the FED on cigarettes, the FED on lower tier has been proposed to be increased from Rs 1,420 per 1000 sticks to Rs 1,630 per thousand cigarettes. The FED on upper tier has proposed to be increased from Rs 3,155 per 1000 sticks to Rs 3,620 per thousand cigarettes.
In last budget, the FBR had notified increase in the rate of Federal Excise Duty on cigarettes from June 6, 2015. According to the SRO.481 (I)/2015, rate of duty was Rs 3030 per thousand cigarettes where locally produced cigarettes if their on-pack printed retail price exceeds Rs 3350 per thousand cigarettes (PCT heading, 24.02). The rate of duty was Rs 1320 per thousand cigarettes where locally produced cigarettes if their on-pack printed retail price does not exceed Rs 3350 per thousand cigarettes (PCT heading, 24.02). Later, the FBR had also imposed additional Federal Excise Duty (FED) at Rs 125 per 1000 high tar locally produced cigarettes while Rs 100 per 1000 low tar locally produced cigarettes to generate additional revenue from cigarette manufacturers.