FBR launches audit of sugar mills in Sindh

KARACHI: The Federal Board of Revenue (FBR) launched a large scale audit of sugar mills in Sindh to verify reports of sales tax evasion by them, sources said on Monday.

The sources said the audit of around 30 sugar mills in the province was launched through deputing tax officials at the factories to scrutinise their supplies and stocks.

The sources said the FBR deputed tax officials on at least four sugar mills for on-site monitoring of their supplies and raw materials for production.

The FBR asked the remaining sugar mills to provide information about their supplies.

A FBR official said the audit was launched after suspected massive sales tax evasion by the sugar mills.

The collection of sales tax from sugar fell 15 percent during the last fiscal year of 2017/18 despite record production of the sweetener. Sales tax collection declined to Rs19.87 billion during the last fiscal year from Rs23.45 billion in the preceding fiscal year, according to an annual report released by FBR.

The sugarcane production, during the fiscal year of 2017/18, witnessed a record figure at 81.102 million tones, showing an increase of 7.4 percent over the preceding year’s production of 75.48 million tons, according to the Economic Survey of Pakistan.

The sources said the tax offices issued show cause notices to sugar mills for launching the audit exercise.

Further, the tax offices also assigned duties to auditors and inspectors for detailed investigation of their records.

An official at Regional Tax Office Karachi said the government has given a go-ahead for the audit exercise and directed the tax authorities not to bow to any political intervention.

The official said there are plenty of evidences that sugar mills are involved in underestimating turnover to reduce sales tax payment.

The official further informed that the FBR could not be able to ask for the record from several sugar mills in the past due to political interference.

The FBR has decided to launch audit exercise following the start of crushing by the sugar mills during the current month.

The sources said the FBR asked sugar mills to provide it with the past five years record to determine the trend of sugarcane supply and production in the Sindh region.