FBR expects Rs100b tax from tobacco industry in fiscal year 2017-18

ISLAMABAD: The Federal Board of Revenue (FBR) expects at least 20 percent increase in tax collection from tobacco industry, taking total figure to Rs 100 billion by the end of the current fiscal year. In the previous fiscal year, the government collected Rs 74 billion tax from this sector whereas in the fiscal year 2015-16 the total amount of Rs 111 billion was collected from tobacco industry.

Official sources told Customs Today that this sharp decline in the tax collection was due to the mounting sale of illegally manufactured and smuggled cigarettes in the country. This sale has inflicted loss of billions of rupees in the form of tax evasion to the national exchequer.

The sources cleared that in the Finance Act 2017, no direct advance tax was levied on the tobacco growers but the illegal cigarette manufacturing factories misled the tobacco growers that FBR had imposed five percent tax on the growers; whereas factually that the FBR had imposed five percent advance tax on tobacco procurement and it does not apply on the growers.

Therefore, the sources said that Pakistan Tobacco Board (PTB) charged 5% advance tax from the buyers and cigarette manufacturers. This measure has been taken to avert the sale and manufacturing of illegal cigarettes as well as to document the sale/ purchase of tobacco in the country.

“It is need of the hour that the government must take adequate measures to check tax evasion in the tobacco industry. In this regard, consistent, indiscriminate and effective actions are required to get the relevant laws implemented and followed by the concerned quarters,” the sources added.

To a question about checking the sale illegally manufactured or smuggled cigarettes, the sources said that Pakistan Customs had confiscated cigarettes worth billions of rupees in different raids in almost all four provinces and thus saved the national exchequer from bearing loss of millions in the form of tax evasion.