FBR seeks real-time videos of sugar production

KARACHI: A tax department has asked sugar mills to give it a real-time access to video monitoring of crushing and other production processes in a bid to avert tax evasion, it was learnt on Saturday.

Large Taxpayers Office (LTO) Karachi directed sugar mills to install video cameras to comply with mandatory online monitoring of production activities. They were asked to get video analytics system from authorised vendors installed at their facilities.

The LTO Karachi has jurisdiction over 29 sugar mills for assessment of tax. Implementation of a video analytics system for electronic monitoring of sugar manufacturing has been made mandatory for the crushing season 2020/21.

In September, the FBR introduced ‘video analytics rules for electronic monitoring of production of specified goods’ through a statutory regulatory order. The following month, Pakistan Sugar Mills Association (PSMA) signed a memorandum of understanding for the implementation of video analytics rules.

Video analytics technology has been introduced to monitor the production of specified goods through high tech video cameras to be installed on the production lines of the sugar industry.

“The introduction of new technology will enable FBR to receive real-time video analytics data of production from the manufacturing sites and use it for tax collection purposes,” said an official at LTO Karachi. Video cameras will capture information that shows production through object detection and counting, transmit data to control room at the FBR on real-time basis and detect unexpected stoppage.

The FBR intends to expand the monitoring through video cameras including production and supply of other consumer goods falling under the third schedule of the Sales Tax Act 1990 which covers goods sold in retail packing in the open market. The goods include fruit juices, ice cream, aerated waters/beverages, squashes, cigarettes, beauty soaps/shampoos/toothpastes/perfumes/cosmetic items.

A senior FBR official told The News last month that the tax evasion in the sugar sector is massive due to large supply made to the undocumented sector. Sugar mills, on the other hand, said they have sustained burden of additional sales tax cost of approximately Rs13 billion per annum for two and half years due to disparity in taxation values.

“The FBR high-ups are silent over the issue of fixation of sugar price for sales tax despite the fact the retail prices of the commodity sky-rocketed,” the anonymous official said. “The sugar mills are charging sales tax at Rs60 per kg and depositing to exchequer.” PSMA said sugar industry has been paying sales tax on higher values in accordance with the law as no violation was ever reported by the concerned tax authorities.