Islamabad: The documented tobacco sector contributed an additional Rs41 billion in taxes during fiscal year 2025-26, bringing total collections to Rs357 billion, following intensified enforcement against illegal cigarette manufacturing and smuggling, Fair Trade in Tobacco (FTT) said on Wednesday.
The FTT, an industry body, said the increase in tax receipts reflected stronger enforcement by the Federal Board of Revenue (FBR) and other authorities against tax evasion and the sale of unstamped cigarette products, a news release said.
FTT Chairman Muhammad Amin said the documented tobacco sector contributed Rs357 billion in federal excise duty (FED), general sales tax (GST) and income tax during FY2025-26, compared with Rs315 billion in the previous fiscal year.
According to figures released by the organization, collections from FED and GST alone increased to Rs329 billion from Rs284 billion a year earlier.
The organization said Pakistan Tobacco Company paid Rs260.7 billion in taxes during FY2025-26, up from Rs222 billion in the previous year, while Philip Morris Pakistan contributed about Rs52.2 billion.
Amin attributed the increase in revenue to enforcement measures, including the deployment of officials at Green Leaf Threshing Units, implementation of advance tax requirements, action against undeclared production and provincial operations targeting unstamped cigarette packs.
He said enforcement efforts in Khyber Pakhtunkhwa had been particularly significant, claiming that a substantial share of Pakistan’s illegal cigarette manufacturing and tobacco diversion was concentrated in the province.
Despite the improvement in tax collections, FTT estimated that illegal and smuggled cigarettes continued to account for a significant portion of the domestic market, resulting in annual revenue losses of around Rs400 billion.
Amin also urged the authorities to examine financial flows linked to cross-border cigarette smuggling, saying undocumented transactions could have implications beyond tax evasion.
The organization called on the government to sustain its enforcement campaign and priorities bringing illegal manufacturers, distributors and retailers into the tax net instead of increasing the tax burden on compliant companies.
Amin said stricter monitoring of tobacco-processing facilities, manufacturing units, transport routes, warehouses and retail outlets, coupled with coordinated action by provincial governments and the FBR, could increase tobacco-sector tax revenues to between Rs575 billion and Rs600 billion in the coming years.
