FBR revokes notification on massive increase in FED on cigarettes

FBR revokes notification on massive increase in FED on cigarettes

On May 2, 2023, the Federal Board of Revenue (FBR) in Pakistan revoked its earlier notification SRO 178(I)/2023, which had massively increased federal excise duty (FED) rates on cigarettes.

The FBR issued SRO 515(I)/2023, which rescinded the earlier notification, effective immediately.

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Under the now-revoked notification, the FED rate was increased to Rs16,500 per thousand cigarettes on locally produced cigarettes if their on-pack printed retail price exceeded Rs9,000 per thousand cigarettes. For locally produced cigarettes with an on-pack printed retail price that did not exceed Rs9,000 per thousand cigarettes, the FED rate was Rs5,050 per thousand cigarettes.

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According to sources within the FBR, the revocation of the earlier notification will not affect the latest prices of cigarettes since the new FED rates were inserted through the Finance Supplementary Act, 2023. The FBR clarified that the FED rate under S. No. 9 and 10 of Table-1 of the First Schedule to the Federal Excise Act (FEA) had been increased through the Finance (Supplementary) Act, 2023.

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The minimum price threshold has also been enhanced through an amendment to “Restriction-3-Minimum Price.” To ensure that no cigarette brands become liable to lesser FED as a result of changes in the price threshold, a new condition “Rate of Duty” has been added after Table-1 in the First Schedule to FEA.

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