The NBR has made a groundbreaking decision to increase the prices and tax rates on cigarettes. The interim government has decided to raise the prices and tax rates on all types of cigarettes and increase taxes on tobacco imports midway through the fiscal year 2024-25 to protect public health.
To implement this, amendments have been made to the VAT and Supplementary Duty Act. The draft of the VAT and Supplementary Duty (Amendment) Ordinance–2025, including these amendments, received policy approval at the advisory council meeting yesterday (01 January 2025), subject to vetting by the legislative division. Although the revised draft ordinance was approved in principle and announced after the meeting, the government has not officially disclosed the specific changes to the VAT regulations. However, some details about the changes have been obtained from NBR sources.
What are the new prices for cigarettes at each tier?
According to the NBR, cigarette prices and supplementary duties are being raised to align with WHO guidelines and increase revenue collection. The supplementary duty will be increased by 1.5%. Consequently, the price of low-tier cigarettes will increase by BDT 5, while the prices for high, medium, and premium tiers will increase by BDT 10.
For instance, the price of a 10-stick pack of low-tier cigarettes will rise from BDT 50 to BDT 55, with the supplementary duty increasing from 60% to 61.5%. Similarly the price of a 10-stick pack of premium-tier cigarettes will increase from BDT 160 to BDT 170. The price of a 10-stick pack of high-tier cigarettes will increase from BDT 120 to BDT 130. The price of a 10-stick pack of medium-tier cigarettes will increase from BDT 70 to BDT 80.
The supplementary duty for the three higher tiers will rise from 65.5% to 67%.
Additionally, the tax on tobacco imports has been increased from 60% to 100%.
According to NBR estimates, the government expects to generate an additional BDT 400 crore in revenue from the cigarette sector over the next six months.
