FBR Likely to Double Excise Duty on Energy Drinks in Upcoming Budget

Major changes are expected in the Federal Excise Duty (FED) regime in the next federal budget (2025-26), including the doubling of FED from 20 to 40 percent on energy drinks. Sources told ProPakistani that several proposals are under consideration by the Federal Board of Revenue (FBR) on the FED side. Except for FED on immovable properties, no relief is likely on the FED side. There is a strong likelihood that the FED would be used as a revenue generation measure in the coming budget. Last year, the FBR used the Federal excise duty as a major revenue generation measure with imposition of the FED to the tune of Rs. 289 billion in 2024-25. The FBR raised excise duty on international air travel, and Rs. 15 per kg FED is applicable on the supply of white crystalline sugar by any person to a manufacturing, processing, or packaging entity. The government has also increased the FED on cement from Rs. 3 per kg to Rs. 4 per kg last year. Through the Finance Act, 2024, FED was imposed on the following goods: FED @ Rs. 44,000 per kg has been imposed on acetate tow; FED @ Rs. 1200 per Kg has been imposed on nicotine pouches, and FED @ 5 percent ad valorem has been imposed on lubricating oil. Presently, the FBR is reviewing different proposals to change the rate of the FED on juices and aerated water. However, nothing is final in this regard. In February 2023, the rate of federal excise duty on all types of aerated water was increased from 13 percent to 20 percent, and a 10 percent FED was imposed on sugary fruit juices, syrups, and squashes. The FBR is also reviewing the current FED structure on cigarettes. However, there is no proposal to reintroduce a third tier of cigarettes, they added.