Track & Trace System may help boost tax collection by Rs230bn/year

LAHORE: The growth in tax collections could see an annual jump of Rs230 billion on effective implementation of the Federal Board of Revenue’s (FBR) Track & Trace System, a report said on Friday.

The World Bank and FBR have jointly analysed that the tax gap in the cement, steel and sugar sectors was an estimated Rs150 billion annually. On the other hand tax evasion in the tobacco sector has reached Rs80 billion.

The implementation of track and trace system has increased the sales tax collection from the sugar industry.

According to the data released by the FBR, sales tax collection from sugar mills from December 2021 to March 2022 was Rs6.59 billion more than the same period last year.

From December 2020 to March 2021, the FBR collected sales tax of Rs19.9 billion from sugar mills, while in December-March of the current financial year, the sales tax collection was Rs26.5 billion.

Following the implementation of track and trace, 151 production lines of 79 sugar mills across the country have come under the supervision of FBR's state-of-the-art digital monitoring, which has been implemented to compile accurate production records.

The implementation of track and trace on the sugar industry is also helping the government compile real statistics on sugar production, which will eliminate black marketing and hoarding.

The government has found that sugar production during the crushing season increased by 34 percent to 7.51 million tonnes as against 5.63 million tonnes last season with the help of the track and trace system. This ends the misreporting of sugar production as well as parking of undeclared money by the sector.

The FBR has hinted that in the next few months, along with the entire tobacco industry, other important industries like fertiliser, steel and cement will also be brought under digital surveillance of the track and trace systems.

To prevent tax evasion in the cigarette industry, FBR has so far implemented a track and trace system in 23 cigarette manufacturing units located in Pakistan, Azad Jammu, and Kashmir.

Agreements have been reached with two major tobacco manufacturers and their products will soon be on the market with tax stamps.

A renowned financial expert Syed Saifullah Kazmi said that the track and trace system will increase the government revenue and reduce the economic damage caused by illegal companies and will also benefit the companies operating legally.

“For the success of the track and trace system, it is necessary that the track and trace system be implemented in all major sectors in Pakistan and it is necessary to use world-class tax stamps which cannot be duplicated or used more than once,” he said.

Saif has urged the authorities to increase the capacity of tax authorities for effective implementation of the track and trace system, as well as to create awareness among retailers and consumers.

“It is also important to make public information about the identification of tax stamps so that consumers can also identify counterfeit and illegal cigarettes,” he reasoned.