FBR to open sugar mills cases

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to open up cases of four major sugar mills of last five years in order to recover billions of rupees sales tax as recommended by the Sugar Inquiry Commission.

It has also been decided that the benami transactions identified by the Commission would be investigated by respective Benami Zones before filing references against them.

The FBR also decided to place track and trace system for three more sectors – sugar, cement and fertilizer – from next fiscal year, as it will help in gauging real production of these sectors for getting due taxes.

“We are going to open up audit cases of four major mills identified by the Sugar Inquiry Commission in its report of last five years in order to create demand and then recover billions of rupees evaded taxes,” a top official of FBR disclosed to The News on Saturday.

The official said the Commission utilized the FBR’s data to investigate the sugar mills but now under the law the FBR could open up audit of four major mills after Eid holidays.

The FBR had kept minimum price at Rs 60 per kg for deduction of sales tax.

Earlier, the Commission had held sugar millers responsible for evading billions of rupees tax and recommended that the matter be referred to the FBR for recovery of due taxes.

“The matter needs to be referred to the FBR with the instructions to recover the sales tax evaded by the sugar mills during last one year on additional amount of ex-mill price exceeding the FBR threshold of Rs60 per kg. Further, the FBR should take steps to immediately start collecting sales tax on actual prevailing ex-mill rates instead of benchmark rates of Rs60 per kg” the Sugar Inquiry Commission recommends to FBR in its detailed report.

The commission in its findings revealed that the increase in tax impact was Rs3.6 per kg due to the increase in rate of GST to 17%, after 14 July 2019. The real increase in the retail price occurred between December 2018 and June 2019 when it went up by about Rs16 per kg.

Similarly, the major increase in ex-mill price occurred between December 2018 and June 2019 when it increased by almost Rs12 per kg which is from Rs51.64 to Rs63.59 per kg. This period saw no increase in sales or other taxes and the price of sugarcane, the major input, was stable.

The increase in retail price between July 2019 and January 2020 is from Rs71 per kg to Rs74.64 per kg the data, therefore, does not show any major effect on retail price.