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ISLAMABAD: Chairman Federal Board of Revenue (FBR) Asim Ahmad has directed the Project Director, (Track & Trace System) to ensure speedy implementation of the track and trace system on tobacco, fertilizers, cement and petroleum products as per agreed timelines to control massive sales tax evasion in big sectors.

Sources told Business Recorder that the FBR Chairman has received a detailed presentation of the status of the implementation of the system in different sectors. The meeting was held at the FBR Headquarters after Asim Ahmad assumed charge of the post of new FBR Chairman. Tax authorities have directed the team of the Track & Trace System to meet the timelines agreed for implementation of the system.

According to the sources, the FBR will not allow the cigarette manufactures to remove tobacco products from the production site, factory premises or manufacturing plants without affixation of tax stamps/Unique Identification Marking (UIMs) from extended deadline of May 20, 2020.

Earlier, the deadline was April 30, 2022 which has now been extended upto May 20, 2022.

The provisions of Section 40C (2) of the Sales Tax Act, 1990 read with Rule 150ZF of the Sales Tax Rules, 2006 mandate FBR to notify the date for the implementation of electronic monitoring of production and sales of goods in the manner prescribed in the law on all manufacturing sites of notified sectors.

Fertiliser sector: FBR to implement track-and-trace system on July 1

Two leading cigarette manufacturing companies are under the process of final stage of implementation of the track and trace system whereas one local company has also signed the tripartite agreement with the FBR. However, seven local manufacturers have obtained the stay order against the track and trace system and the next date of hearing has been fixed on June 8, 2022.

The FBR will also confiscate cigarette packs (without tax stamps) manufactured in Azad Jammu and Kashmir (AJK), but brought within the territorial jurisdiction of tariff areas of Pakistan.

Sources said that the installation of the machinery has been started at the production lines of the fertilizer manufacturing units. The machinery for installation at the fertilizer plants has been imported and subsequently being installed at different plants. The installation of the machinery would be completed by June 30, 2020. However, the FBR will confiscate fertiliser bags being cleared from production sites, factory premises or manufacturing plants without affixation of tax stamps/ Unique Identification Markings (UlMs) from July 1, 2022.

The system would be installed at 13 production lines of fertilizer including at the import stage. Therefore, the system would be installed at nine local units and 3-4 systems being installed to affix tax stamps on imported fertilizer. The imported fertilizer would also be required to be documented through the track and trace system at relevant customs stations or ports. The tax stamps would also be affixed at the imported fertilizer bags packed at ports or customs stations.

Sources added that the innovative digital monitoring system of sugar production has been implemented over 79 sugar mills, having 151 production lines nationwide. The FBR has collected sales tax of Rs 26.5 billion in first four months (i.e. Dec, 21 to Mar, 22) of current sugarcane crushing season against Rs 19.9 billion during the corresponding period in the last crushing season, registering an increase of Rs 6.59 billion (33 percent) growth.

All sugar mills had to declare their actual crushing and production during the current crushing season. Therefore, as a result of this digital intervention, the sugar mills have produced record high sugar i.e. 7.51 million tons (up to March 24, 2022) as against 5.63 million produced during last crushing season, showing an increase of 34 percent. Likewise, the FBR has collected sales tax amounting to Rs 26.5 billion in first four months (i.e. Dec, 21 to Mar, 22) of current crushing season as against Rs 19.9 billion collected during the corresponding period in the last crushing season, registering an increase of Rs 6.59 billion which comes to 33 percent growth.

The system will result in digital monitoring of the large-scale manufacturing and production of these key sectors. Besides, preventing revenue leakages, it will help in minimizing human intervention and thus pave the way for a transparent and reliable tax compliance system across the country, they added.

Copyright Business Recorder, 2022

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