FBR to maintain advance FED on tobacco leaf

ISLAMABAD: The Federal Board of Revenue (FBR) has said that advance Federal Excise Duty (FED) on tobacco leaf will remain unchanged for the upcoming fiscal year 2020-21.

The FBR told a Special Committee of the National Assembly on Agricultural Products chaired by the Speaker National Assembly Asad Qaiser about the decision. 

The board rejected a proposal to increase advance FED from Rs10 to Rs500, considering the risk and tax burden on tobacco growers.

The committee was informed that FBR consulted all stakeholders on a proposal for a fully adjustable tax to be increased from Rs10 to Rs500 to create more revenue for the government.

The FBR decided that the current regime for advance FED on tobacco leaf will remain unchanged after observing the potential negative impacts on farmers.

Asad Qaiser has recommended a proposal for additional taxes on cigarettes to increase government financing amid the adverse impact of the pandemic.

He said the FBR should increase tax on cigarettes and imported tobacco and recommended strengthening enforcement mechanism to prevent tax evasion and smuggling.

He said the end product in the value chain should be taxed and the burden of taxation should be shifted to cigarette consumers.

Tobacco growers informed the committee that previous tax policies for the industry affected the interest of the farmers due to reduced competition and suppressed prices.