KARACHI: The Federal Board of Revenue (FBR) has allowed cigarette manufacturers to reduce prices to combat massive duty evasion
According to the official sources, a provision has been added to the federal excise laws through the Finance Act, 2017, under which three different tiers of prices have been introduced for duty calculation.
“The first tier, which attracts higher prices of cigarettes, are permitted to reduce prices, but other tiers are allowed to adjust prices,” said an official.
For the last many years, the FBR has constantly been increasing the duty on the sale of cigarettes to discourage the use of tobacco. However, this resulted in counterproductive to reduce the consumption, as production of total number of cigarettes remained stagnant, and on the other hand massive fall in revenue was witnessed during successive years.
“The FBR witnessed around 45 to 50 percent reduction in federal excise duty on the sale of cigarettes during the fiscal year 2016-17,” the official said.
The revenue from tobacco sector declined to Rs90 billion in 2015-16 as compared to Rs120 billion during the preceding fiscal year. Through the Finance Act, 2017, which applies from July 1, 2017, the FBR has enhanced the duty to Rs3,740 per 1,000 cigarettes for tier-1 brands, that are locally produced cigarettes if their on-pack printed retail price exceeds Rs4,500/1,000 cigarettes.
