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FBR slaps Rs300/kg tax on tobacco sale


May 11, 2019

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed Rs300 per kilogram on the sale of tobacco by the green leaf threshing (GLT) units, but the tax is adjustable and is not applicable on farmers.

The tax is applicable on purchasers of processed tobacco, which cannot be used in cigarette manufacturing unless it is processed at a GLT unit. “Whenever a manufacturer will send the tobacco to GLT for processing, a mandatory adjustable tax of Rs300 per kg is mandatory to be paid to the FBR along with the name of the manufacturer,” the FBR said in a statement.

FBR’s documentation and monitoring of GLT units, under the new procedure, resulted in maintaining complete record of actual sale of processed un-manufactured tobacco to check tax evasion by local cigarette manufacturers. The revenue body issued a statutory regulatory order (SRO 1149) as part of the measures for monitoring of GLT units.

The purpose is to document the buying and selling of tobacco to check evasion of taxes. “For this purpose, the issuance of invoices of the tobacco being sold has been made mandatory for the GLT units.”

Prior to this procedure, certain cigarette manufacturers purchased excess amount of tobacco and declared less with the FBR and Pakistan Tobacco Board for evading taxes on cigarettes. The new system would enable the government to know about the exact amount of tobacco being purchased by the cigarette manufacturers.

The FBR said a commissioner having jurisdiction will post officers of Inland Revenue at the premises of GLT units, whether working separately or as part of a cigarette manufacturing unit, for monitoring the receipts, processing, wastage, storage, issuance of un-manufactured tobacco for sale, transfer or self-consumption.

“They shall also stamp and sign the tax invoice issued by the GLT units,” the FBR said. “The officers posted at the GLT units shall be responsible for framing a daily report of receipts, processing, wastage and issuance of tobacco and duty to be levied thereon to the concerned commissioner for reconciliation with monthly returns.”

The FBR has barred sale to inactive persons. A GLT unit couldn’t sell un-manufactured tobacco to any person who is not on active taxpayers’ list. The FBR said the cigarette manufacturing factories operating their own GLT units will be required to issue invoices and pay duty.

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