Tobacco sector tax take surges to Rs357bn in FY26

July 29, 2026 (MLN): Pakistan’s documented tobacco industry generated Rs357bn in federal taxes during FY2025-26, marked an increase of Rs41 billion from the previous year as authorities stepped up action against illicit cigarette production and smuggling, according to Fair Trade in Tobacco (FTT).

The industry body said stronger enforcement by the Federal Board of Revenue (FBR) and other relevant authorities helped improve tax collection by targeting tax evasion and the circulation of unstamped cigarette products, according to APP.

FTT Chairman Muhammad Amin said the documented tobacco sector paid Rs357bn in federal excise duty (FED), general sales tax (GST) and income tax during the fiscal year, compared with Rs315bn collected in FY2024-25.

Collections from FED and GST increased to Rs329bn during FY26, up from Rs284bn a year earlier, according to figures shared by the organisation.

Among major industry players, Pakistan Tobacco Company contributed Rs260.7bn in taxes during FY26, compared with Rs222bn in the preceding fiscal year. Philip Morris Pakistan paid approximately Rs52.2bn during the period.

FTT linked the higher tax contribution to a series of enforcement measures, including the deployment of officials at Green Leaf Threshing Units, enforcement of advance tax requirements, action against undeclared cigarette production and provincial-level operations against unstamped cigarette packs.

Amin highlighted enforcement in Khyber Pakhtunkhwa, saying the province accounted for a substantial share of illegal cigarette manufacturing and tobacco diversion in Pakistan.

Despite the increase in documented-sector tax payments, FTT estimated that illegal and smuggled cigarettes still represented a significant portion of the domestic market, causing annual revenue losses of around Rs400bn.

The FTT chairman also called for scrutiny of financial flows associated with cross-border cigarette smuggling, noting that undocumented transactions could create implications beyond tax evasion.

The industry body urged the government to maintain enforcement efforts and focus on bringing illegal manufacturers, distributors and retailers into the tax system rather than placing additional tax pressure on compliant companies.

Amin said tighter monitoring of tobacco-processing facilities, manufacturing plants, transportation routes, warehouses and retail outlets, along with coordinated efforts between provincial governments and the FBR, could lift tobacco-sector tax revenues to between Rs575bn and Rs600bn in the coming years.

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