Prime Minister Imran Khan on Tuesday stated that the Federal Board of Revenue's (FBR) track and trace system was crucial for curbing tax evasion in the country.

Addressing a meeting of the federal cabinet, the premier said that the FBR was trying to bring in automation through the system which is aimed at accelerating the digitisation of economic activity, improving revenue forecasting and curbing counterfeit products in the market.

Earlier this month, the FBR had signed a contract with a consortium to operationalise the ‘Track & Trace Solution’ on tobacco, cement, sugar and fertiliser sectors from July 1. The FBR had said that 45 million tonnes of cement, over four billion sticks of tobacco cigarettes, four million tonnes of sugar and 30m tonnes of fertiliser would be brought into the tax net.

"Approximately 40 per cent of cigarettes are sold [without paying taxes] which causes the country to suffer. For the past 15 years, the FBR has been trying to introduce the system, to bring in automation but it is sabotaged each and every time," the prime minister said.

"The board had assured the government that the new system would be in place by June 1 but now we have been told that the Sindh High Court (SHC) has issued a stay order."

The premier said that the objective behind informing the federal cabinet was to make the members aware of the kind of tax evasion being done in the country. He maintained that majority of the tax in the cigarette industry came from two companies, while the remaining were not taxed.

"Until this system is in place, we cannot stop tax evasion," he said, directing the law minister to inform the SHC about the situation to get the stay order vacated. "Because of tax evasion, we have to rely on indirect taxes which leads to inflation."

In an earlier announcement, the FBR had said that installation of the track and trace system in identified sectors would be a game-changer for improving revenue and curbing counterfeit products in the market.

The FBR had said it expected to start installing UIMs (tax stamps) on products of various sectors from July this year.

Commenting on electoral reforms, the premier said that the federal cabinet should be regularly given updates on the progress of electronic voting machines (EVMs). "They have become inevitable for making our electoral process transparent. During each election, [the opposition] says it was not conducted properly so this is the only way."

He added that he wanted updates on EVMs and voting for overseas Pakistanis during each meeting of the federal cabinet.