The Federal Board of Revenue (FBR) is expected to face a massive revenue shortfall of Rs83 billion in achieving the tax collection target from the cigarette industry during the fiscal year of 2023. Despite increasing the excise duty by 200%, the FBR will not be able to reach its desired tax collection target as the revenue collected from the cigarette industry till May 15, 2023, was Rs161 billion, and it is estimated to increase to Rs177 billion by the end of June 2023. The government’s initial projection was to collect Rs200 billion from the tobacco industry, and it increased the tax collection target to Rs260 billion after raising the federal excise duty by 153%.
The shortfall of Rs83 billion may result from the FBR’s inability to achieve its determined tax collection target of Rs260 billion. The sources in the cigarette industry have stated that the FBR can only collect a maximum amount of Rs177 billion from the industry. Thus, there remains a significant discrepancy of Rs83 billion between the expected collection and the target set by the government.