Federal Excise Duty (FED) in Pakistan is an indirect tax levied by the federal government on the manufacture, production, import, and certain services as defined under the Federal Excise Act, 2005. The primary objective of FED is to regulate the consumption of specific goods and services, especially those considered non-essential, harmful, or luxury in nature, while also generating substantial revenue for the government.
FED is administered by the Federal Board of Revenue (FBR) and is payable by manufacturers, importers, and service providers.
Legal Framework
The key legislative instruments governing FED in Pakistan include:
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Federal Excise Act, 2005
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Federal Excise Rules, 2005
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Finance Act (issued annually)
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Notifications and SROs issued by FBR
Scope of Federal Excise Duty in Pakistan
FED applies to both:
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Goods manufactured or produced in Pakistan
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Goods imported into Pakistan
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Certain services provided within Pakistan
FED is either charged in:
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Ad valorem terms (as a percentage of value)
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Specific terms (fixed amount per unit/quantity)
Common Goods & Services Subject to FED (2025 Update)
Tobacco Products
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Cigarettes, cigars, and other tobacco substitutes
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FED can range from 24.5% to over 300%, depending on brand and retail price
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Tiered structure applies based on per 1,000 sticks or retail price slabs
Carbonated and Aerated Drinks
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Soft drinks, energy drinks, flavored sodas
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FED charged at 20% of retail price
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Bottled sweetened juices may also fall under this category in some cases
Luxury and Non-Essential Items
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High-end vehicles (over 1300cc), imported cosmetics, perfumes, watches, and jewelry
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FED rates range from 10% to 25%, subject to government policy updates
Services Subject to FED
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Telecommunications (mobile, internet, and landline services) – 16% to 19.5%
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Air travel (business/first class domestic and international tickets) – PKR 10,000 to PKR 50,000 per ticket
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Franchise services, banking and insurance services – 13% to 16%
Cement
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FED on cement is charged at a fixed rate per metric ton, currently PKR 2 per kg (i.e., PKR 2,000 per metric ton)
Edible Oils and Ghee
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Typically attract ad valorem FED of 16%, though zero-rated in some cases when sold unpackaged or in bulk for industrial use
Who Is Required to Pay FED?
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Manufacturers and Producers of excisable goods in Pakistan
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Importers bringing excisable goods into the country
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Service Providers offering excisable services
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FED is deposited on a monthly basis along with filing of FED returns through the IRIS portal
Registration and Filing
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Entities involved in excisable goods/services must be registered for FED with FBR
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Monthly FED return (Form STR-1) must be submitted by the 15th of the following month
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Payment is made through PSID (Payment Slip ID) via banks integrated with 1Link system
Exemptions and Concessions
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FED may not apply if the supply is export-oriented or within exempt sectors
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Exemptions or reduced rates may be granted through SROs or under Free Trade Agreements (FTAs)
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Cottage industries producing below certain annual revenue thresholds may also be exempt
Enforcement and Penalties
Failure to comply with FED laws may result in:
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Penalties for late filing or non-filing
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Recovery of unpaid FED
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Seizure of goods or business records
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Legal action including fines and prosecution under Excise Act
