Cigarette sector: Crackdown could generate extra Rs40bn, PM told

ISLAMABAD: Prime Minister Shehbaz Sharif was told on Thursday that a crackdown on the country’s cigarette sector could generate an extra Rs40 billion in tax revenue from the industry this year, signalling the government’s determination to hit smugglers and tax dodgers where it hurts.

The update came during a review meeting on ongoing reforms at the Federal Board of Revenue (FBR), which the prime minister chaired.

In a briefing to the prime minister, officials laid out plans to overhaul the tax system and clamp down on revenue leakages.

READ MORE: Illicit cigarette trade: FBR flags Rs200bn annual revenue loss: Kayani

A comprehensive plan was presented to the prime minister, pitching an overhaul of Inland Revenue operations long criticised for inefficiency and opacity, with promises of a more automated, transparent and contactless system to plug chronic leakages.

Speaking at the meeting, Sharif described the plan as a potential milestone in the government’s reform agenda. “An automated, modern and effective tax management system, enabled through the use of modern technology, is essential,” he said, emphasising the need to reduce human intervention and discretionary powers in tax collection.

Sharif noted that the implementation of the plan would not only increase revenues but also enhance transparency, fairness and public confidence in the tax system.

He added that reforms at the FBR to document the economy and widen the tax net would continue, as the tax authority faces persistent criticism over weak enforcement and a chronically narrow base.

The prime minister also commended provincial authorities for their role in curbing the circulation of illegal cigarettes, which contributed to the projected revenue gains.

He ordered that the proposed automated income tax collection system be rolled out first in Islamabad, signalling a test of whether technology can tame the FBR’s long-standing inefficiencies.

Officials briefed the meeting on the capabilities of the proposed tax system, which would leverage property, vehicle, and banking records to identify under-reported income and assets.

The system will employ modern technology and artificial intelligence to ensure automation, transparency, and efficiency in revenue collection.

Under the proposed reforms, a National Faceless Audit Wing, a National Assessment Wing and a Field Operations Wing would be established to streamline operations.

The meeting was attended by federal ministers including Rana Tanveer Hussain, Azam Nazeer Tarar, Musaddik Malik, Ahad Cheema, Muhammad Aurangzeb, Attaullah Tarar, Shaza Fatima Khawaja and Ali Pervez Malik.

State Minister for Finance Bilal Azhar Kayani, Attorney General for Pakistan Mansoor Usman Awan, the special assistant to the prime minister on industries Haroon Akhtar Khan and senior government officials were also present.

The government has indicated that the measures are part of a broader strategy to reform tax administration, reduce evasion, and increase fiscal transparency across the economy.

Copyright Business Recorder, 2026