To check tax evasion: Sugar mills to be under strict govt surveillance

ISLAMABAD: By invoking powers under Section 40-B of the Sales Tax Act, the Federal Board of Revenue (FBR) has deputed 280 officers to all sugar mills across the country to monitor their production to curb billions of rupees tax evasion.

The sugar industry is considered a political industry owned by all the political elites irrespective of any political divide; there are many owners belonging to the Pakistan Muslim League-Nawaz, Pakistan Peoples Party and Pakistan Tehreek-e-Insaf.

The prime minister has granted powers to the Intelligence Bureau (IB) to keep strict surveillance over FBR’s designated monitoring officers on sugar mills as there is an alleged nexus. It is feared that Sales Tax evasion of over Rs30 to 40 billion takes place on an annual basis.

After receiving instructions from the prime minister, the FBR has devised three-pronged strategy, including invoking 40-B of the Sales Tax Act, for deputing monitoring officers on sugar mills, effective placement of Track & Trace System (TTS) and assignment of officers for further monitoring of deputed officers.

As per the FBR estimates, out of the total production of 6.7 million tons sugar, the sales tax, which is 18 percent, should be Rs130 to Rs140 billion on an annual basis. However, the FBR’s collection stands at around Rs90 to Rs100 billion. There is not much input involved except sugarcane and electricity, so there is no other way but to ensure proper monitoring of production for avoiding tax evasion.

An official said that the TTS was installed at 80 sugar mills but the FBR fears that there is still risk of sugar bags being sent without TTS stamps. Without effective enforcement, the FBR cannot plug leakages of billions of rupees despite installment of TTS.