NBR raises low-tier cigarette prices to boost revenue after Tk3,000cr shortfall in 2 months

Highlights:

• NBR raises low-tier cigarette MRP from Tk62 to Tk65 per 10-stick pack
• Cigarette revenue fell short by nearly Tk3,000 crore in the first two months of FY27
• Low-tier cigarettes already sell for up to Tk70 per pack in the market
• NBR says the move will boost revenue without raising consumer prices
• A tobacco company official says retail prices will increase

The National Board of Revenue (NBR) has raised the maximum retail price (MRP) of low-tier cigarettes from Tk62 to Tk65 for a 10-stick pack, as revenue collection from cigarettes fell by nearly Tk3,000 crore in the first two months of the current fiscal year.

The NBR disclosed the price increase in a notification issued on 15 September and published on its official website today (17 September).

The government currently collects around 83% of the retail price of cigarettes as various forms of tax.

The decision to increase the price of low-tier cigarettes was taken at a cabinet meeting on 1 September chaired by Prime Minister Tarique Rahman. At the meeting, the NBR said the price adjustment would not increase the retail price paid by consumers.

However, questions remain over whether retail prices will actually remain unchanged following the revision of the MRP.

Industry sources said low-tier cigarettes are already being sold at prices above the government-set MRP of Tk62, with 10-stick packs selling for as much as Tk70 in the market.

According to NBR data presented at the cabinet meeting, Bangladesh sold between 77 billion and 85 billion cigarettes annually over the five years from FY2019-20 to FY2023-24. Low-tier cigarettes accounted for around 60% to 64% of total cigarette sales during the period, representing roughly 75% to 79% of the country's cigarette market.

The NBR said cigarette sales fell to 62 billion sticks in FY2024-25 after the government made the largest-ever increase in cigarette prices and tax rates on 9 January last year.

This means cigarette sales declined by around 25% within one and a half years, with the NBR attributing most of the decline to lower sales of low-tier cigarettes.

"Therefore, if the price of low-tier cigarettes is increased slightly while keeping the purchase price for consumers at the retail level unchanged, it will bring dynamism to revenue collection," the NBR said at the cabinet meeting.

"It has already resulted in a revenue shortfall of around Tk3,000 crore from the cigarette sector in the first two months of FY2026-27," it added.

Industry sources said cigarette companies are now looking for ways to pass the higher price on to consumers following the revised MRP.

Experts, however, said there is little justification for another retail price increase as low-tier cigarettes are already being sold at around Tk70 a pack.

A senior official of a leading tobacco company, speaking to The Business Standard on condition of anonymity, said, "The price will increase at the consumer level."

"We are analysing the matter after receiving the government's gazette. Hopefully, we will be able to announce the new price," he said.