The government has introduced a new tax ie Health Levy on tobacco at the rate of Rs 10 per kg from manufacturers at time of purchasing of tobacco and retained third tier of Federal Excise Duty (FED) on cigarettes with an enhanced rate of FED on all three slabs of the FED.
Through the Finance Bill 2018, Health Levy on tobacco has been imposed. Pakistan Tobacco Board or its contractors, at the time of collecting cess on tobacco, directly or indirectly, shall collect Health Levy at the rate of ten rupees per kilogram of tobacco from every person purchasing tobacco including manufacturers of cigarettes.
The Federal Board of Revenue (FBR) has retained third tier of Federal Excise Duty (FED) on cigarettes with enhanced rate of FED on all three slabs of the FED on cigarettes.
According to the Finance Bill 2018 issued here on Friday, locally produced cigarettes if their on-pack printed retail price exceeds four thousand five hundred rupees per thousand cigarettes, the rate of FED would be Rs 3,964 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, Rs 1,770 per thousand cigarettes and locally produced cigarettes if their on-pack printed retail price does not exceed two thousand nine hundred and twenty-five rupees per thousand cigarettes, the rate of the FED would be Rs 848 per thousand cigarettes.
In last budget (2017-18), prior to budget of 2017-18 cigarettes were subject to federal excise duty on two-tier basis. For tier-l , federal excise duty was chargeable @ Rs 3,705 per thousand cigarettes whereas for tier-2, it was Rs 1,649 per thousand cigarettes. Rate of federal excise duty for tier-I has been enhanced to Rs 3,740 per thousand cigarettes whereas for tier-2, it has been fixed at Rs 1,670 per thousand cigarettes. A new tier-3 was introduced in budget (2017-19) whereunder if on-pack printed retail price of cigarettes does not exceed Rs 2,925 per thousand cigarettes, federal excise duty is chargeable @ Rs 800 per thousand cigarettes.