Senate panel examines alleged tax evasion, illicit tobacco manufacturing and cigarette theft while seeking fresh FBR and FIA reports.
ISLAMABAD: The Senate Standing Committee on Interior and Narcotics Control has reviewed a sub-committee report concerning an estimated $1 billion in annual revenue losses allegedly linked to tax evasion, illicit manufacturing and trade irregularities in Pakistan’s tobacco sector.
The committee, chaired by Senator Faisal Saleem Rehman, met at Parliament Lodges on September 22, 2026. Senators Talha Mahmood, Saifullah Abro, Shahadat Awan, Mir Dostan Khan Domki, Umer Farooq, Jam Saifullah Khan, Palwasha Khan and Dilawar Khan attended the meeting.
The committee examined a detailed report submitted by Senator Saifullah Abro covering tax evasion in the tobacco sector, manufacturing activity in tax-exempt areas including the former FATA and PATA regions, and the theft of 2,828 cartons of cigarettes from Federal Board of Revenue (FBR) warehouses.
The $1 billion figure has featured in previous Senate proceedings, with the committee continuing to investigate the scale and sources of the alleged revenue leakage. In June, an FBR official reportedly estimated the tobacco-sector tax loss at around Rs40 billion, considerably below the $1 billion figure cited in earlier government discussions.
Senate questions cigarette theft investigation
The committee scrutinised the Federal Investigation Agency’s (FIA) inquiry into the theft of 2,828 cigarette cartons and the subsequent registration of a first information report (FIR).
Members expressed dissatisfaction over the nomination of lower-ranking officials in the FIR and called for responsibility to be fixed at the appropriate level.
The FIA was directed to provide the committee with an update on the progress of its investigation.
The cigarette theft case has been under parliamentary scrutiny for several months. Earlier Senate proceedings established that the cartons had been stolen from FBR warehouses in Swabi and Mardan, while the FIA was subsequently directed to expand its investigation.
Concerns over tax-exempt areas
The committee also examined tax exemptions and manufacturing activities in the former FATA and PATA areas.
Members questioned the enforcement process across what they described as a Rs1,120 billion tax-exempt zone, particularly where administrative notices and legal proceedings were directed towards lower-level personnel while questions remained concerning the responsibility of factory owners and principal beneficiaries.
Senator Talha Mahmood raised concerns over alleged procedural weaknesses during the initial registration of cases. He pointed to instances where individuals identified during preliminary inquiries were reportedly not included in subsequent charges.
The committee also examined the movement and use of raw materials imported into tax-exempt areas.
Earlier Senate proceedings had raised similar concerns over whether goods imported under exemptions were being diverted for consumption elsewhere, prompting calls for stronger monitoring by the FBR and enforcement agencies.
FBR warehouse controls questioned
The committee’s review of FBR warehouse procedures also highlighted alleged weaknesses in the management of confiscated goods.
Members raised concerns over the absence or unavailability of CCTV surveillance, inventory registers and verified handover records for seized contraband.
The committee called for stronger controls to ensure that confiscated goods are properly recorded, secured and accounted for throughout the enforcement process.
FIA, FBR asked to coordinate
The committee examined the respective jurisdictions of the FIA and FBR, particularly concerning independent FIA inquiries into matters falling within the tax authority’s domain.
It directed the two institutions to establish a coordinated operational mechanism to avoid jurisdictional gaps and strengthen enforcement.
The committee also reviewed notifications granting the Frontier Corps and Pakistan Rangers anti-smuggling powers in border areas of the former FATA and PATA regions.
Officials from the Interior Ministry explained that such operational powers had been delegated in response to the complex law-and-order situation in those areas.
The committee decided to continue its investigation into tax evasion and revenue losses and agreed to constitute a further sub-committee to examine the matter in greater detail.
Passport rules for overseas Pakistanis
The committee also received a briefing from the Ministry of Interior on Rule 18 of the Passport Rules, 2021, concerning the issuance of Emergency Travel Documents (ETDs) for the one-way repatriation of stranded or deported Pakistani citizens.
Chairman Faisal Saleem Rehman questioned delays in verifying nationality and family-tree records involving Pakistani missions abroad and the Intelligence Bureau.
The committee also discussed complaints that Pakistani diplomatic missions sometimes issue short-term passports with validity of one to three years instead of the standard five-year period.
The chairman informed members that he had introduced a legislative bill in the Senate aimed at reforming passport rules and simplifying procedures for overseas Pakistanis.
FBR, FIA given one-month deadline
At the conclusion of the meeting, the chairman directed the FBR and FIA to submit comprehensive inquiry reports within one month.
The institutions were also directed to provide verified physical stock registers covering seized goods held in warehouses.
The committee stressed that future enforcement proceedings should focus on the principal beneficiaries and factory owners, rather than concentrating primarily on field-level personnel.
The latest proceedings add to months of parliamentary scrutiny of tobacco-sector taxation, smuggling, tax-exempt manufacturing areas and the theft of confiscated cigarettes.
The Senate has previously directed the FBR to improve monitoring of tax-exempt areas and strengthen procedures for the storage and management of seized goods.