The Federal Board of Revenue’s (FBR) Inland Revenue Department has launched a campaign against the overcharging for cigarettes and seized 650 cartons of cigarettes from a major international manufacturer.
Through the phenomenon of brand mispricing, the FBR’s Inland Revenue has taken the initiative against the cigarette manufacturers involved in less payment of the federal excise duty (FED).
The case falls under Karachi’s tax jurisdiction, and because cigarettes were mispriced, less FED was paid to the national exchequer. The aforementioned business has set the retail price of one of its brands at a lower amount than the fixed or applicable Federal Excise Duty (FED) rate.
According to sources, more inquiries are being made into the aforementioned major tobacco company. At this early stage of the investigation into the company’s reputation, the name cannot be revealed, they added.
It is significant to note that on August 9, a business published a price list for its cigarette brands and advertised the price of each brand, including sales tax. The Federal Excise Duty (FED) on Tier 1 cigarette packets is Rs. 330, according to Federal Excise Act, 2005 Schedule 1, item no. 9. However, as is clear from the advertisement, the suggested retail price for this brand is below the relevant FED.
The printed retail price is not only less than the applicable duty, but also does not include any additional fees, such as the cost of production and other applicable taxes, in accordance with section 12 of the Federal Excise Act of 2005. Given the aforementioned laws, it is claimed that the advertised retail price violates the minimum FED as defined by the law and that the cost of production has not been added to the retail price.
This allegedly results in both FED tax evasion and sales tax evasion because higher retail prices attract higher sales taxes, which are levied at an 18% rate.
