Federal excise hits Rs 840bn: cigarettes alone paid Rs 251bn last year

Federal excise duty collection reached Rs 840.02 billion in 2025-26, up 9.6 percent from Rs 766.64 billion the year before, an increase of Rs 73.38 billion, according to Federal Board of Revenue data.

Excise is the quiet tax. Unlike income tax, nobody files a return for it and nobody sees a deduction slip. It is built into the shelf price of a cigarette pack, a bag of cement and an air ticket, so you pay it without ever being told how much.

Where the Rs 840 billion came from

The fifteen largest excise items together brought in Rs 687.42 billion, growing 7 percent. The sharpest riser on the list was washing machines, up 48.7 percent.

Cigarettes are almost a third of it

At Rs 251.26 billion, tobacco alone is 30 percent of all federal excise. The 11.4 percent rise came with higher rates rather than higher volumes, which is the point of the duty: it is meant to make the product dearer.

Cement at Rs 160.35 billion grew only 4.1 percent, which tracks a construction sector that has not recovered. Excise on cement is charged per tonne, so slow growth here means fewer bags sold, not a softer rate. If you are costing a house build, that duty is already inside the per-bag price your supplier quotes.

What it means for you

Air travel is the line most households feel directly. Domestic and international air travel duty together came to Rs 101.8 billion. A Karachi to Islamabad ticket carries federal excise before any airline fare, fuel surcharge or airport tax is added.

Two categories actually shrank. Beverage concentrates fell 2.2 percent and aerated waters 0.8 percent, the only meaningful declines on the list, a sign that soft drink volumes are under pressure as prices climb.

The wider picture

Excise growth of 9.6 percent sits below the 11.1 percent year-on-year inflation recorded in August 2026. In real terms, the excise take shrank. That matters for the budget: when a tax that rides on prices grows slower than prices, the base underneath it is contracting.

The collection was also lopsided across the year. The first half brought in Rs 400.73 billion, up 15.6 percent, while the second half brought Rs 439.29 billion, up only 4.6 percent. Growth ran out of momentum after January.

Check the current inflation reading on our inflation rate page, and work out the sales tax inside any purchase with the sales tax calculator.