By Abdul Ghani

The Federal Board of Revenue (FBR) collected Rs140,179 million in taxes from the tobacco sector during the Fiscal Year 2025-26, according to the documents available with Wealth Pakistan.

Cigarette production during 2025-26 stood at 29.607 billion sticks, reflecting the continued large-scale operations of tobacco manufacturers across Pakistan.

A breakdown of tax figures indicates that the Federal Excise Duty (FED) remained the primary contributor to total collections, accounting for the bulk of Rs140,179 million. The sales tax formed a smaller but significant component.

The FED continues to dominate tobacco taxation due to its structure, which imposes heavy duties at the production stage, whereas sales tax is applied along the supply chain.

According to the data, tax collection in 2025-26 shows a decline compared to the Fiscal Year 2024-25, when total tax receipts from the tobacco sector stood at Rs289,537 million. This significant drop suggests either contraction in production, shifts in pricing tiers, or the impact of regulatory and market dynamics affecting the industry.

Similarly, cigarette production decreased from 36.877 billion sticks in 2024-25 to 29.607 billion sticks in 2025-26, indicating a modest contraction in output during the period under review.

Officials said the figures were compiled on a company-wise basis, covering all major cigarette manufacturers, and consolidated to provide a sector-wide overview of production and tax contributions. The data was shared in compliance with directives seeking detailed insights into tobacco companies, including year-wise production, revenue generation, and tax payments.

Despite the marginal year-on-year decline, the tobacco sector remains a significant source of revenue, with FED and sales tax together forming the backbone of collections. The figures underscore the government's continued reliance on tobacco taxation as a key fiscal tool, even as policy discussions around public health and consumption control intensify.

The latest data shows that while production and tax revenues have slightly eased in 2025-26, the industry remains an important contributor to the national exchequer.

Credit: INP-WealthPk