The government has revised Federal Excise Duty (FED) structure on cigarettes upwards on the basis of new FED slabs to increase the incidence of tax on cigarettes giants. Through Finance Bill (2014-15) issued here on Tuesday, the Table-I of the First Schedule of the Federal Excise Act, 2005 has been amended to specify the two-tier rate of duty structure.
According to the revised FED structure as per Finance Bill (2014-15), the rate of the FED would be Rs 2,632 per 1,000 cigarettes in case the locally produced cigarettes on-pack printed retail price exceeds Rs 2,706 per 1,000 cigarettes. The rate of the FED would be Rs 1,085 per 1,000 cigarettes where locally produced cigarettes' on-pack printed retail price does not exceed Rs 2706 per 1,000 cigarettes.
Previously, the rate of the FED was Rs 2,325 per 1,000 cigarettes where locally produced cigarettes on-pack printed retail price exceeds Rs 2286 per thousand cigarettes. The rate of the FED was Rs 880 per 1,000 cigarettes where locally produced cigarettes on-pack printed retail price does not exceed Rs 2,286 per 1,000 cigarettes. The FBR has estimated to collect Rs 5 billion from the revised FED structure on cigarettes in 2014-15 as compared to the estimates of Rs 15 billion for 2013-14. According to the FBR, the FED rates have been enhanced to be in pace with inflation and to add to revenue in 2014-15.
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