ISLAMABAD: As the sugar industry has conditionally agreed to pasting of the tax stamp on sugar bags, the national tax collecting body is all set to implement the Track and Trace (T&T) system from the current month.

The T&T system is expected to check sales tax evasion of billions of rupees at least in four major sectors -tobacco, cement, sugar and fertilisers.

In a recent meeting with sugar mill owners including representatives from the Pakistan Sugar Mills Association (PSMA), FBR officials said this system would be launched from September.

PSMA representatives were opposing implementation of the tax stamp, claiming that the stickers would come off during stacking and handling.

Process aimed to monitor tax evasion in four industrial sectors

According to an FBR official, the tax collecting body had been making efforts for the last 15 years to implement this system, but it was delayed every time due to court cases and other factors. The prime minister has consistently pushed the FBR to launch the system to curb tax evasion and document the country’s economy, he added.

The better option is to print QR code on polypropylene bags as stickers come off after some time, PSMA representatives suggested.

However, it was agreed that officers of the FBR would not penalise the sugar mill owners or dealers if the tax stamps on sugar bags were found to be damaged, and if the system fails then QR codes would be printed on the bags.

At the same time, the FBR has directed sugar mills to start the process of installation of the T&T system.

The FBR will notify a date after implementation of the system, in order to put an end to the sale of cigarettes, sugar, cement, and fertiliser products without a tax stamp. Sources in FBR items without tax stamps would be confiscated from shop owners.

According to an official, tax evasion only in the tobacco industry was estimated to be around Rs200 billion annually.

The system was scheduled to be installed from July 2021 but it was delayed after a case was filed in the Sindh High Court (SHC) that was recently dismissed.

Published in Dawn, September 2nd, 2021