It will be difficult for the government to achieve the tax target of Rs 200 billion. Photo: File
Islamabad: Heavy tax evasion has been revealed in the sector of cigarette manufacturing and sale, which is also affecting the tax collections received by the FBR from the regulated sector of cigarettes.
According to the details, after the government imposed heavy taxes on the cigarette industry, the trend of buying illegal and harmful cigarettes among the consumers has increased to an alarming level, as a result of which an extraordinary increase in tax evasion has been revealed in this sector. Is.
The federal government is relying heavily on cigarettes to get Rs 170 billion in new taxes to cover the budget deficit. According to sources in the cigarette industry, the rate of tax evasion in this sector is already very high and now that the federal excise duty has been increased to an unprecedented level, this trend will further increase.
Sources say that various brands of cigarettes are being sold at half the price fixed by the government while various reward schemes have also been started to increase sales.
According to sources, despite strong opposition from the legal cigarette manufacturing and selling industry, the federal excise duty has been increased dramatically, which has increased the price of legal cigarettes by up to 100 percent.
Sources say that cigarettes of smuggled brands are being sold at a lower price of Rs 50 to 100 per pack compared to locally produced illegal cigarettes, leading to massive tax evasion.
The government had set a target of collecting 200 billion rupees tax from the cigarette industry in the current financial year. Due to the extraordinary increase in the FED, this target has also increased. However, it will be difficult for the government to meet the normal target of 200 billion rupees. .
FED on cigarettes is expected to reduce the sale of legal cigarettes by 50%, which will affect the revenue of the government in the same proportion. And increasing their margins and market penetration without paying taxes.
According to sources, the recent increase in FED will reduce the market share of legal cigarette sales in Pakistan from 60 percent to less than 50 percent and the gap will be filled by cheap illegal cigarettes that will make up for the investment in the legal industry. There is a big risk.