The federal government on the instructions of the International Monetary Fund (IMF) will implement a Track and Trace (T&T) solution in the beverage sector to get real-time information on production and sales.
The beverage industry uses glass bottles, pet bottles, and tetra packs for packing its products. As per the initial working of the Federal Board of Revenue (FBR), each bottle or package should be verifiable through scanning besides the production data of each beverage unit should be made available to FBR’s database in real time.
Meanwhile, FBR’s initiative to capture Large Scale Manufacturing (LSM) across the country through Track & Trace System has already started paying dividends.
FBR with the help of its Licensee Authentix Inc., US, and its consortium partners AJCL Private Limited and MITAS Corporation of South Africa implemented T&T solutions in 4 tobacco facilities and 30 production lines including Pakistan Tobacco Company, Philip Morris (Pak) Limited, Khyber Tobacco and Souvenir Tobacco.
Sources told ProPakistani that Inland Revenue and Customs Intelligence as well as IREN directorates’ ongoing crackdown not only helped with the affixation of around 3 billion tax stamps on cigarette packets, sugar as well as fertilizer bags but also brought most of the local tobacco manufacturers under T&T’s fold.
Since the Islamabad High Court quashed all the pending petitions filed by local tobacco players on the implementation of T&T and now the local tobacco players are in communication with the FBR for signing of TPAs and implementation of T&T.
On the other hand, the Central Board of Revenue, AJK has also instructed directed all “illegal” cigarette manufacturers in the AJK to install the Track and Trace system (latest manual/automatic applicators including tax stickers/stamps) in their units by August 1, 2023, or else the clearance of their products will be halted followed by initiation of legal action, including closure under rules of the units concerned.
As per the data of FBR, there was a 13 percent growth witnessed in revenue from the tobacco sector after the implementation of Track and Trace. The FBR collected Rs. 149 billion from July to May 2023 which was Rs. 132.32 billion in the first 11 months of FY22.
Similarly, the FBR has so far implemented T&T solutions at 79 sugar facilities and 136 production lines.
According to FBR, Sales tax collection from the sugar sector during the crushing season (December 2021 – March 2022) under Track and Trace system amounted to Rs. 26.03 billion as compared to the corresponding period of the previous crushing season which stood at Rs. 19.9 billion, showing an increase of 31 percent in four months only.
Furthermore, the tax department has so far implemented T&T solutions in 11 fertilizer facilities and 78 production lines, and with the implementation of sales tax, there will be a surge in revenue from the Fertilizer sector during this fiscal year.
Sources said that some sugar mills and fertilizer plants are not addressing issues with regard to site readiness and non-compliance operations as well as maintenance SOPs.
The site readiness issues are resulting in further delays in the implementation of T&T while non-compliance operations, as well as maintenance SOPs by the sugar and fertilizer manufacturers, are not only affecting equipment’s health but T&T accuracy issues are also arising.
Furthermore, there is also a lack of ownership of T&T by the sugar and fertilizer bigwigs as the system lies without proper protection which affects it.
Besides this, the cement sector is repeatedly delaying the implementation of the T&T system to avoid monitoring sales production and stock positions.
Recently, FBR has deputed its teams in big cement companies for monitoring sales production and stock positions under section 40B on the reports that the cement sector is allegedly involved in tax evasion by under-reporting its production and sales.
Meanwhile, FBR on the instructions of FTO also conducted an investigation against the cement sector on the allegations of involving fake sales tax supplies.
Sources said that FBR should further improve its enforcement by actively monitoring distributor and retail outlets of notified sectors, besides there is also a need to make past data analysis to measure variance and predict future behavior besides confiscating non-duty paid or smuggled goods.
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