DHAKA, July 12, 2026 (BSS) - The government has unveiled a massive technology-driven strategy to eliminate the illicit tobacco trade, strengthen tax enforcement and safeguard national revenue through a comprehensive “Track and Trace system”.

The system proposed in the national budget for Fiscal Year 2026-27 (FY27) measures combine artificial intelligence, digital authentication, real-time monitoring and public participation to curb tax evasion in the tobacco sector while reinforcing broader public health objectives.

Finance Minister Amir Khosru Mahmud Chowdhury said tobacco taxation remains a vital fiscal and public health instrument while Presenting the national budget in the parliament.

He said: “Tobacco taxation remains one of the most effective tools for protecting public health while generating revenue. … These proposals seek to establish a modern, equitable, investment-friendly, and technology-driven VAT system that encourages economic growth, protects consumers, supports domestic industries, and ensures sustainable revenue mobilization.”

At the centre of the initiative is the introduction of a comprehensive Track and Trace system aimed at preventing illicit trade in tobacco products and ensuring proper tax collection across the production and distribution chain.

The proposed system will introduce real-time monitoring of tobacco production and supply chains through AI-enabled cameras and automated counting devices installed in tobacco manufacturing facilities.

It will also incorporate QR Codes or AR Codes on cigarette tax stamps to enable authentication of tobacco products throughout the supply chain.

“To prevent illicit trade in tobacco products and strengthen revenue protection, the comprehensive Track and Trace system incorporating… real-time monitoring of tobacco production and supply chains; installation of AI-enabled cameras and automated counting devices in tobacco manufacturing facilities; [and] incorporation of QR Codes or AR Codes on cigarette tax stamps,” added the finance minister.

The government also plans to enhance enforcement through public participation by introducing a dedicated “mobile application” that will allow citizens to report illicit tobacco products directly to the National Board of Revenue (NBR).

Alongside the reporting platform, a whistleblower reward scheme has been proposed to encourage credible information on tobacco smuggling and illegal products.

To curb unauthorized cigarette production, the budget proposed restricting the import and sale of cigarette and bidi paper exclusively to authorized manufacturers.

The budget also targets raw materials and emerging nicotine products through higher supplementary duties.

Considering the health risks associated with tobacco consumption, the government proposes imposing a 300 percent supplementary duty on acetate tow and filter rods, which are essential raw materials used in cigarette filters.

A 350 percent supplementary duty has also been proposed on the import of nicotine granules and nicotine pouches to discourage their use.

“Considering the severe public health risks associated with tobacco consumption, I propose imposing a 300 percent supplementary duty on acetate tow and filter rods… [and] imposing a 350 percent supplementary duty on [nicotine granules and pouches],” the finance minister said.

The proposed budget also revises the minimum retail prices of cigarettes per 10 sticks.

Under the new structure, the minimum retail price has been proposed at Tk 62 for the low-tier segment, Tk 92 for the medium tier, Tk 160 for the high tier and Tk 210 for the premium tier.

The budget also proposed fixing the maximum retail price of nicotine pouches at Tk 500 per 10 grams with a 40 percent supplementary duty, while heated tobacco products will carry a maximum retail price of Tk 210 per 10 sticks with a 67 percent supplementary duty.

The proposed measures reflect the government’s strategy of combining digital technology, stronger enforcement, public participation and fiscal policy to combat illicit tobacco trade, protect government revenue and advance public health objectives.

A recent independent pack analysis published in Tobacco Control found an illicit market share of about 5.6 percent, while industry estimates put the figure at more than 18 percent.

Besides, a recent study “Combating Illicit Cigarette Trade to Protect Public Revenue in Bangladesh" where researchers have warned that the rapid expansion of the illicit tobacco market in Bangladesh is causing a significant loss in government revenue.