ISLAMABAD — The Federal Board of Revenue (FBR) generated Rs329 billion in Federal Excise Duty (FED) and General Sales Tax (GST) from Pakistan’s tobacco sector during fiscal year 2025–26 (FY26), representing a Rs45 billion increase from the Rs284 billion collected in FY25.
When accounting for direct income tax, total tax collection from the sector reached Rs357 billion for the fiscal year ending June 30, 2026, up from Rs315 billion in the previous year.
Key Highlights & Tax Contributions
Total Tobacco Revenues: Total tax collections (FED, GST, and Income Tax) rose to Rs357 billion, marking a 13.3% year-over-year increase.
Indirect Tax Breakdown: FED and Sales Tax receipts surged to Rs329 billion.
Pakistan Tobacco Company (PTC): Remained the national treasury’s primary contributor in the sector, contributing Rs260.7 billion in FY26 (up from Rs222 billion in FY25).
Philip Morris Pakistan (PMPK): Ranked as the second-largest tax contributor, paying approximately Rs52.2 billion.
Enforcement & Operational Drivers
According to FBR officials, the increase in revenue collection was driven by targeted enforcement and monitoring operations throughout the production pipeline:
Paramilitary Deployment: Deployment of security forces at Green Leaf Threshing Units (GLTUs) to prevent off-the-record leaf processing.
Track-and-Trace Operations: Strict enforcement of the Track and Trace System across manufacturing facilities.
Police Crackdowns: Coordinated operations with provincial police authorities against the sale and distribution of unstamped cigarette packs.
Advance Withholding Taxes: Enhanced collection mechanisms at raw material processing stages.
Illicit Trade Challenges & Market Realities
Despite rising tax revenues, FBR officials noted that non-compliant and smuggled cigarettes still account for nearly 45% of the total domestic market, causing an estimated annual revenue leak of Rs300 billion.
Annual Consumption: Cigarette consumption in Pakistan remained steady at approximately 81 billion sticks.
Excise Impact: The expansion of illegal market share followed a steep 200% FED hike during FY23, which widened the price gap between duty-paid and illicit products.
Revenue Potential: Officials estimate that full tax compliance across the tobacco sector could unlock an annual revenue potential between Rs575 billion and Rs600 billion.
