Govt working on options to increase FED
ISLAMABAD: The government is working out different proposals to raise federal excise duty (FED) of various items including 100 percent increase in FED from 20 to 40 percent on energy drinks.
It is learnt that the FED would be used a revenue generation measure on the indirect taxes side in coming budget. The FBR imposed/ raised FED on different items to the tune of Rs289 billion in 2024-25.
Presently, the FBR is reviewing different proposals to change the rate of the FED on juices and aerated water. However, nothing is final in this regard.
FED: supply of raw material for soft drinks not proved chargeable
In February 2023, the rate of federal excise duty on all types of aerated water was increased from 13 per cent to 20 per cent and 10 per cent FED was imposed on sugary fruit juices, syrups and squashes.
The FBR also is reviewing current FED structure on cigarettes. However, there is no proposal of re-introducing third tier of cigarettes, they added.
Sources told Business Recorder that last month there were proposals of reduction in tax rates on beverages and tobacco to increase volumes and transactions in these sectors to generate additional revenue during April-June (2024-25). The proposals were dropped and now new working in being done to see impact of any raise of the FED on these items.
The FBR raised excise duty on international air travel and Rs15 per kg FED is applicable on supply of white crystalline sugar by any person to a manufacturing and processing or packaging entity.
The government has also increased the FED on cement from Rs3 per kg to Rs4 per kg last year.
Through Finance Act, 2024, the FED was imposed on the following goods: FED @ Rs44,000 per kg has been imposed on acetate tow; FED @ Rs1,200 per Kg has been imposed on nicotine pouches and FED @ five per cent ad valorem has been imposed on lubricating oil.
Copyright Business Recorder, 2025
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