FBR officers deployed at sugar mills to curb tax evasion

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ISLAMABAD: The Federal Board of Revenue (FBR) has deployed its officers at 20 sugar mills to monitor the commodity’s production, sales and stock position.

According to sources, the tax department has deployed Inland Revenue (IR) officers at 20 sugar mills under Section 40B of Sales Tax Act, 1990. “Sugar mill owners were not providing accurate information about the production, sales and stock position to the FBR,” sources added.

The sugar mills where the officials have been posted include Darya Khan Sugar Mills Limited, Popular Sugar Mills Limited, Deharki Sugar Mill Limited, Adam Sugar Mill Limited, Baba Farid Sugar Mill Limited, Digri Sugar Mill Limited, Mirpurkhas Sugar Mill Limited, Faran Sugar Mills Limited, Mehran Sugar Mills Limited, Dewan Sugar Mills Limited, Al-Abbas Sugar Mills Limited, Ansari Sugar Mills Limited, Bawany Sugar Mills Limited, Larr Sugar Mills Limited, New Dadu Sugar Mills Limited, Rani Sugar Mills (Pvt) Limited, Al-Noor Sugar Mills Limited, Tando Allahyar Sugar Mills Limited, Habib Sugar Mills Limited and Sindabadgar Sugar Mills Limited.

It is pertinent to mention that FBR had recently conducted a thorough analysis of sugar production for the fiscal year 2018-19, which revealed huge tax evasion by sugar mills.

The outcome of the analysis showed that FBR and the cane commissioners of three provinces had a sugar production difference of 641,000 metric tonnes, signalling towards underreporting of stock by the mills.

The FBR had noted that local supplies during the tax period of July 2019 fell by 255pc due to enhancement in the tax rate (from 8pc in June 2019 to 17pc in July 2019).

The analysis further revealed that the stock holding last year ending June 2018 was 3,147,000 metric tonnes, whereas the closing stock of the year ending on June 2019 was only 2,230,778 metric tonnes, depicting a decline of 29pc.

It was also pointed out that the sugar manufacturers had declared a high quantity of supplies during June 2019 to evade sales tax, knowing that the rate was to increase in July 2019.

According to per the FBR analysis, “Sugarcane is the biggest raw material of sugar industry. The undocumented/under-documented nature of this agriculture sector poses a great challenge to accurately gauge the quantity of sugarcane produced and supplied to a particular mill.”

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