KP Assembly Halves Tobacco Tax in New Finance Amendment Bill

Peshawar:The Khyber Pakhtunkhwa Assembly has significantly reduced the provincial tax on tobacco, halving it from the previously imposed rate. The provincial government had initially set a tax of 50 rupees per kilogram of tobacco in the upcoming fiscal year’s budget, but this has now been amended to 25 rupees per kilogram following the approval of the Finance Amendment Bill.

According to the details, the provincial government has abolished the 50 rupees per kilogram excise tax on Virginia tobacco and halted its collection. This decision comes in light of the fact that the federal government already imposes a tax of 390 rupees per kilogram on tobacco.

The Finance Amendment Bill includes a provision to reduce the tax on Virginia tobacco to 25 rupees per kilogram. Additionally, the tax on White patta tobacco has been reduced from 30 rupees to 15 rupees per kilogram. The bill also stipulates that the tax on tobacco will increase by 10 percent annually.

Tobacco growers in Khyber Pakhtunkhwa, including those in Swabi District, have expressed their satisfaction and joy at this decision.

However, the tax of 7.5 rupees per kilogram on tobacco used for naswar remains unchanged.

Previously, the Peshawar High Court had restrained the provincial government from taking action against tobacco companies and sought a response. The court, led by Justice Shakeel Ahmed, had heard a case challenging the provincial excise duty on raw tobacco. The petitioner’s lawyer informed the court that the provincial government had imposed an excise duty of 50 rupees per kilogram on raw tobacco, in addition to the 390 rupees per kilogram already collected by the federal government.