The Federal Board of Revenue (FBR) has reported a substantial increase in the collection of Federal Excise Duty (FED) during the fiscal year 2020/2021, with the duty on cigarette sales leading the way.
The FED collection from cigarette sales amounted to Rs107.38 billion, marking a notable growth of 19.5% compared to the previous fiscal year’s collection of Rs89.82 billion.
The FBR highlighted that the overall net collection from FED witnessed an 11.6% increase during the fiscal year 2020-21, translating to an additional Rs. 29.1 billion compared to the previous fiscal year. The share of FED in the total FBR collection is estimated to be around 6%.
The major sectors contributing to FED revenues include cigarettes, cement, beverages and concentrates, natural gas, and services. The table below illustrates the growth in FED collection for various commodities:
| S. No | Commodities | FY 2020-21 (Rs. Billion) | FY 2019-20 (Rs. Billion) | Growth (Absolute) | Growth (%) |
| 1 | Cigarettes | 107.38 | 89.82 | 17.56 | 19.5 |
| 2 | Cement | 74.51 | 71.23 | 3.28 | 4.6 |
| 3 | Beverages and Concentrates | 33.46 | 28.44 | 5.02 | 17.6 |
| 4 | Natural Gas | 9.62 | 9.43 | 0.19 | 2.0 |
| 5 | Services | 8.98 | 32.08 | -23.10 | -72.0 |
| 6 | Vehicles Motor (Imp) | 8.68 | 1.85 | 6.82 | 368.9 |
| 7 | Edible Oil | 4.36 | 2.69 | 1.67 | 62.5 |
| 8 | POL Products | 4.23 | 3.49 | 0.74 | 21.5 |
| 9 | Vegetable Ghee | 0.38 | 0.22 | 0.16 | 72.7 |
| 10 | Perfumery & Cosmetics | 0.35 | 0.29 | 0.06 | 21.4 |
| Total | Sub-total | 251.93 | 239.52 | 12.41 | 5.2 |
| Others | 27.62 | 10.95 | 16.67 | 152.2 | |
| Gross | 279.56 | 250.47 | 29.08 | 11.6 | |
| Refunds | — | 0 | — | — | |
| Net | 279.56 | 250.47 | 29.08 | 11.6 |
Despite the overall growth, the collection from services, primarily from air travel, witnessed a significant decline due to COVID-19-related restrictions on air travel. On the other hand, the FED collection from vehicles experienced a staggering growth of over 368%, attributed to higher imports of vehicles and parts during the reviewed period.
The FED collection base appears skewed towards a few major items, with the top 10 contributors accounting for approximately 90% of the total collection. Cigarettes lead the way with a 38.4% share, followed by cement (26.7%), beverages (12%), and natural gas (3.4%).
The impressive growth in FED collection reflects the government’s efforts to diversify revenue streams and ensure fiscal stability. However, there is a call for exploring additional avenues to further expand the FED revenue base, reducing reliance on a limited number of commodities and enhancing the overall fiscal resilience of the country.
