ISLAMABAD: The Federal Board of Revenue (FBR) collected Rs329 billion from the tobacco sector on account of Federal Excise Duty (FED) and General Sales Tax (GST) in fiscal year 2025-26, compared with Rs284 billion collected in financial year 2024-25, registering an increase of Rs45 billion.
“The overall FED and GST upside is estimated to be around Rs45 billion as the FBR collected Rs329 billion in 2025-26 compared with Rs284 billion in the previous fiscal year 2024-25,” official sources confirmed to The News here on Monday.
However, FBR sources confirmed that the total revenue collection fetched by the tax collection machinery in the form of FED, GST and income tax stood at Rs357 billion in fiscal year 2025-26, which ended on June 30, 2026, compared with Rs315 billion in the previous fiscal year.
The Pakistan Tobacco Company (PTC) remained the largest contributor towards tax payments, depositing Rs260.7 billion in fiscal year 2025-26 compared with Rs222 billion in the previous financial year 2024-25, registering an increase of Rs38 billion in the fiscal year ended on June 30, 2026. Philip Morris (Pakistan) emerged as the second-largest contributor, paying approximately Rs52.2 billion into the national exchequer during the last fiscal year 2025-26.
FBR sources said the deployment of paramilitary forces at Green Leaf Threshing Units (GLTUs), effective enforcement at the stage of advance withholding taxes, a crackdown against illicit trade, and provincial police action against unstamped cigarette packs paved the way for action against illicit cigarettes during fiscal year 2025-26.
These measures resulted in curtailing illicit and smuggled cigarette sales, which remained at the existing level of around Rs300 billion during the last financial year. The share of illicit and smuggled cigarettes stands at around 45 per cent, causing an estimated revenue loss of Rs300 billion annually to the national exchequer.
The consumption of cigarette sticks remains around 81 billion sticks and has never declined in the country. Following an unprecedented 200 per cent increase in the FED rate, the prices of tax-paid cigarettes increased significantly, resulting in a rise in the share of illicit and smuggled cigarettes since 2022-23. The government has kept the FED rate unchanged in the last few budgets, and tax collection has increased during the past few years. However, illicit and smuggled cigarettes continue to hold the largest market share.
The FBR will therefore have to intensify efforts at GLTU levels and coordinate with provincial governments against unstamped cigarettes to tap the revenue potential of collecting between Rs575 billion and Rs600 billion from the tobacco sector in the coming years.
