The Federal Board of Revenue (FBR) collected Rs225.5 billion in Federal Excise Duty (FED) from the cigarette sector during 2024-25, down 4.1% from Rs235 billion a year earlier, despite a 200% increase in the duty rate.
According to the FBR’s annual report, the cigarette sector’s share in total FED collection fell sharply from 40.7% in FY24 to 29.4% in FY25, reflecting the growing impact of illicit cigarette trade across the country.
Overall FED collection, however, increased by 32.8% year-on-year to Rs766.6 billion during FY25, compared to Rs577.4 billion in the preceding fiscal year. This pushed FED’s share in total tax receipts from 6.2% to 6.5%, with the FBR achieving 101% of its annual target.
The report identified cigarettes, cement, air travel, beverage concentrates, aerated waters, and motor vehicles as key contributors to excise duty revenues. Collectively, the top 15 sectors accounted for nearly 84% of the total FED collection, with cigarettes leading at 29.4%, followed by cement at 20.1% and domestic air travel at 6.9%.
Officials said the decline in cigarette-related revenue despite higher rates highlights persistent enforcement challenges and the growing market share of untaxed, illicit cigarette brands.
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