SWABI: A representative of a multinational tobacco company on Tuesday said that the Rs390 per kilogram advance Federal Excise Duty (FED) is a government-imposed tax applicable only to cigarette-manufacturing companies and not to growers.
“The advance FED does not apply to tobacco growers, and claims suggesting otherwise are misleading,” Pakistan Tobacco Company (PTC) Regulatory Affairs Manager Hamza Amir told reporters here.
He added that the duty does not create any financial liability for growers. He spoke about the challenges facing the tobacco sector, issues confronting farmers, and facts related to taxation.He said tobacco farmers in various growing areas were facing difficulties due to the practices of some unregistered and non-compliant local companies that failed to meet their declared procurement quotas and deliberately delayed purchases, forcing growers to sell their crop at lower prices.
The company official said some local buyers had also failed to make timely payments for tobacco purchased during the previous season, creating financial hardship for thousands of farmers.Responding to concerns that the advance FED had reduced manufacturers’ ability to purchase tobacco, the PTC representative said the claim was misleading.
He explained that in the lower tax tier, where the total tax burden is around Rs5,050 per kilogram, the advance FED component accounts for less than 10 percent and is fully adjustable at the end of the fiscal year.
He maintained that the real challenge for many unregistered and non-compliant companies is not the excise duty itself but the documentation requirements and tax obligations associated with operating in the formal economy.
The PTC official said the company’s procurement quota for 2025 stood at 26.85 million kilograms, but it purchased a total of 39.19 million kilograms of tobacco, spending an additional Rs6.7 billion in line with regulatory requirements to support market stability and assist farmers.
He said tobacco exports declined by 29.5 percent year-on-year during the first quarter of 2026, while Pakistani tobacco remained nearly one US dollar per kilogram more expensive than competing regional products, affecting export competitiveness.He urged regulators to ensure that only contracted farmers are allowed to cultivate tobacco and called for stronger enforcement measures to curb unauthorised cultivation.
