ISLAMABAD: Federal Board of Revenue (FBR) has deployed teams of Inland Revenue at 20 sugar mills to monitor production and supply to detect tax evasion.
The Inland Revenue (IR) officers have been deployed at the premises of sugar mills under Section 40B of Sales Tax Act, 1990 for the monitoring of stock, production and supply.
Sources told that Large Taxpayers Unit (LTU) Karachi had requested the FBR to allow monitoring of sugar mills as huge tax evasion was detected in the past.
Recently, the FBR conducted analysis of sugar production of the last year which revealed huge tax evasion by sugar mills.
The outcome of analysis showed that FBR and the Cane Commissioner of three provinces had a difference of 641,000 metric tons which showed that the sugar mills were under reporting their stock in order to evade tax payments.
It is also identified that the local supplies during the tax period of July 2019 fell by 255 percent due to enhancement in tax rate from eight percent in June 2019 to 17 percent in July 2019.
The analysis further revealed that the stock holding last year ending June 2018 was 3,147,000 metric tons whereas closing stock of the year ending on June 2019 was only 2,230,778 metric tons, which showed 29 percent decline.
It is also pointed out that sugar manufacturers had declared high quantity of supplies during June 2019 to evade sales tax as the tax rate was to increase in July 2019. The FBR analysis revealed that the sugarcane was 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.
Considering the above facts the FBR allowed deployment of IR officers at the sugar mills.
It is worth mentioning that the FBR Chairman through an official memorandum barred the tax offices for invoking Section 40B of the Sales Tax Act, 1990 without prior permission of the board or Member IR Operations.
Following is the list of sugar mills where IR officers have been deployed:
M/s. Darya Khan Sugar Mills Limited.
- M/s. Popular Sugar Mills Limited.
- M/s. Deharki Sugar Mill Limited.
- M/s. Adam Sugar Mill Limited.
- M/s. Baba Farid Sugar Mill Limited.
- M/s. Digri Sugar Mill Limited.
- M/s. Mirpurkhas Sugar Mill Limited.
- M/s. Faran Sugar Mills Limited.
- M/s. Mehran Sugar Mills Limited.
- M/s. Dewan Sugar Mills Limited.
- M/s. Al-Abbas Sugar Mills Limited.
- M/s. Ansari Sugar Mills Limited.
- M/s. Bawany Sugar Mills Limited.
- M/s. Larr Sugar Mills Limited.
- M/s. New Dadu Sugar Mills Limited.
- M/s. Rani Sugar Mills (Pvt) Limited
- M/s. Al-Noor Sugar Mills Limited
- M/s. Tando Allahyar Sugar Mills Limited
- M/s. Habib Sugar Mills Limited
- M/s. Sindabadgar Sugar Mills Limited