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FBR empowers IR to monitor tobacco industry to curb tax evasion

FBR empowers IR to monitor tobacco industry to curb tax evasion

ISLAMABAD: The Federal Board of Revenue (FBR), through SRO 1149(I)/2018, has empowered Inland Revenue officers to monitor tobacco industry to curb tax evasion.

The FBR issued the said SRO amending Federal Excise Rules, 2005 as part of the measures for strict monitoring of Green Leaf Threshing (GLT) units.

The government intends to collect additional Rs40 billion through this industry through the Finance Supplementary (Amendment) Bill 2018 for raising federal excise duty out of which Rs26 billion will be collected through raise in tax rates and remaining Rs14 billion through effective enforcement. For placing effective enforcement, now the FBR has plugged loopholes to curb tax evasion.

The FBR has directed IR officers to carry out mandatory monitoring of Green Leaf Threshing (GLT) units, whether working separately or as part of a cigarette manufacturing unit. “Yes, this amendment in rules will help us curb tax evasion of cigarettes of all kinds of units,” FBR’s DG Inland Revenue Enforcement Network (IREN) Tanvir Malik told media.

The FBR has issued SRO 1149(I)/2018 to amend Federal Excise Rules 2005 as part of the measures for strict monitoring of GLT units. According to the notification, the commissioner having jurisdiction shall post IR officers at the premises of GLT Units, whether working separately or as part of a cigarette manufacturing unit, for monitoring the receipts, processing, wastage, storage, issue of un-manufactured tobacco for sale, transfer or self-consumption. They shall also stamp and sign the tax invoice issued by the GLT units.

It shall be the responsibility of GLT units to provide the officers, so posted, with in-house accommodation and office space to enable them to perform their duties in an efficient manner. The officers posted at the GLT units shall be responsible for framing a daily report of receipts, processing, wastage and issuance of tobacco and duty leviable thereon to the concerned commissioner for reconciliation with monthly returns.

The FBR said that at the time of sale of processed un-manufactured tobacco to a cigarette manufacturing unit or any other person, in case of an independent GLT unit, or transfer thereof for in-house manufacturing of cigarettes by a composite GLT unit, a tax invoice, as set out in Annexure-I, shall be issued. In case of export of processed un-manufactured tobacco by GL T units, such manufacturer or person shall be entitled to zero rating in terms of section 5 of the Act and shall issue zero rated invoice.

In case of contract processing or toll manufacturing by GLT units, the duty shall be charged at the rate as specified at serial 7 of the First Schedule to the Act and the same shall be shown on the tax invoice along with processing charges.

The FBR has also imposed a bar on sale to inactive persons. A GLT unit shall not sell un-manufactured tobacco to any person who is not on Active Taxpayers’ List maintained under the Act. The FBR said that the cigarette manufacturing factories operating their own GLT units shall be required to issue invoices and pay duty as stipulated in Rule 82 and shall maintain separate invoice book, register of receipts, issue and balances as prescribed in Annex-II.

Federal excise invoice to accompany vehicles: All vehicles transporting un-manufactured tobacco shall be liable to carry a copy of federal excise invoice as evidence of chargeability of federal excise.

The documents and requirements prescribed in the federal excise Notification No. SRO 217(1) 2010, dated the March 31, 2010, shall also be applicable, mutatis mutandis, to unmanufactured tobacco, along with additional requirement, as specified in sub-rules (2) and (3). The additional requirements shall also be applicable to cigarettes.