Cigarettes to Get More Expensive After New Tax Bomb

The federal government is imposing a 6 percent withholding tax on cigarette distributors in the 2025-26 budget, senior sources told ProPakistani. The provision for withholding tax rates under Section 153 of the Income Tax Ordinance will be changed to charge the new tax on the gross amount of payment received by distributors when they hand over cigarette sticks to retailers. Also, distributors of pharmaceutical products will be subject to a 6 percent tax on the gross amount of payments. Previously, the withholding tax rate was 2.5 percent on distributors of cigarettes and 1 percent on distributors of pharmaceutical products.