Major Overhaul in Federal Excise Duty Expected in Budget 2025-26
The Federal Excise Duty (FED) regime is poised for significant changes in the upcoming Federal Budget 2025-26, with sources revealing that the Federal Board of Revenue (FBR) is considering doubling the FED on energy drinks from 20% to 40% as part of new revenue generation measures.
No Relief Expected Except for Immovable Properties
Sources informed ProPakistani that no general relief is expected under the FED framework except for the real estate sector, specifically on immovable properties. The FBR is actively assessing various FED revisions to increase revenue collection.
Key FED Changes Under Consideration
- Energy Drinks: Proposed increase from 20% to 40%.
- Juices & Aerated Water: FED rate adjustments under review, but no final decision yet.
- Cigarettes: The FBR is assessing revisions in the current structure but will not reintroduce the third tier.
Background & Previous Budget Measures
In the previous fiscal year (2024–25), the FBR collected around Rs. 289 billion through FED by:
- Increasing FED on international air travel
- Imposing Rs. 15/kg FED on sugar supplied to manufacturers
- Raising FED on cement from Rs. 3/kg to Rs. 4/kg
- Imposing new FEDs via the Finance Act 2024, including:
- Rs. 44,000/kg on acetate tow
- Rs. 1,200/kg on nicotine pouches
- 5% ad valorem on lubricating oil
In February 2023, the FED on aerated waters rose from 13% to 20%, and a 10% FED was introduced on sugary juices, syrups, and squashes.
What to Expect
While discussions continue, the FED is likely to remain a key tool for revenue generation in FY26, with higher levies on beverages, tobacco, and possibly juices.
Stay tuned for finalized announcements in the upcoming Budget 2025-26.
