Govt to introduce track and trace system in cotton industry to curb tax evasion

ISLAMABAD: The government has decided to introduce a track and trace system in the local cotton and ginning industry to curb tax evasion, Minister for Industry and Production, National Food Security and Research Rana Tanveer Hussain announced on Friday.

Speaking to a delegation from the Pakistan Cotton Ginners Association, Hussain emphasized the pivotal role of the cotton industry in the rural economy and its potential to provide employment opportunities for a large segment of the skilled and semi-skilled workforce.

The meeting addressed additional taxation measures on seed cotton and cottonseed cake in the current budget, according to a press release.Hussain stated that the track and trace system would be implemented on locally produced cotton bales to prevent tax evasion, thereby protecting local farming communities and the industrial sector. The minister highlighted that the new system would ensure greater transparency and accountability within the industry, potentially increasing government revenues by reducing illegal trade practices.

The minister also mentioned that the Cotton Control Act (CCA) will be enforced in collaboration with provincial governments. He assured the delegation that their proposals regarding sales tax on seed cotton and cottonseed cake will be considered.

Hussain further assured the delegation that the issue of new taxation measures will be discussed with the Finance Division and the Federal Board of Revenue to address the challenges faced by the local ginning industry.

Representatives of the Cotton Ginners Association highlighted the impact of heavy taxes on cotton products, which they said are affecting the production of the cotton ginning industry. They called for a rationalization of taxation on these commodities to benefit the local industrial sector and promote cotton crop output.

They argued that rationalizing the sales tax will enhance tax compliance and help curb tax evasion in the country. The delegation noted that over 8.4 million cotton bales were produced last season and expressed optimism that crop output could increase to 20 million bales with the government’s supportive policies. They also suggested that the government should consider subsidies and other incentives to encourage higher production and investment in modern ginning technologies.