Tobacco industry to fully install ‘track & trace system’ by year-end

ISLAMABAD: The electronic monitoring track and trace system of the Federal Board of Revenue (FBR) is expected to be installed at the entire tobacco industry by end December 2023.

Sources told Business Recorder that the two leading companies and one local company have already installed the automated system. The six local units have installed manual track and trace system and information is available with the FBR.

On the other hand, two more local units would purchase auto-applicators to install automated system at their manufacturing premises.

The Prime Minister’s inquiry committee on the implementation of the track and trace system objected that the applicator machines are very costly and manufacturers are forced to buy such machines from different vendors, where each vendor machines offers different standards.

Therefore, the FBR and licensee should standardise applicator machines, etc., and the government should offer such machines on discounted or instalment basis so it does not create burden on manufacturer which is one of the major reasons for many manufacturers not coming within the TTS ambit and resisting to sign the agreement.

One production line of each cement factory has started a trial run of the track and trace system, sources said.

The system is also being implemented in majority of tobacco manufacturing units (mostly covering large firms that account for more than 90 per cent of tax revenue). However, it is not yet be fully installed by small manufacturers.

Sources said that the FBR has been proactively involved in discussions with the local tobacco manufacturers across the country in the first quarter of current fiscal year and has been successful in bringing the local tobacco players into TTS fold. Resultantly, the rollout of TTS across the local tobacco has been gaining momentum.

Sources further said that the revenue collection from tobacco sector has increased after the implementation of the track system with major raise in the rates of the federal excise duty (FED) on cigarettes.

Similarly, the revenue collection from the sugar sector after the implementation of the T&T system reached Rs26.03 billion during December 2021 to March 2022.

Prior to the implementation of T&T, the collection from the sugar sector was Rs19.9 billion, sources added.

According to the sources, the FBR is also planning to introduce a “Sales Tracking System” before the next crushing season in the sugar sector to ensure traceability of the production till end user.

Presently, Inland Revenue officers are deputed at sugar mills to monitor the sales and production of the commodity.

The inquiry committee on implementation of track and trace system (TTS) has strongly recommended installation of independent production monitoring devices at the manufacturing premises of cement, fertiliser, and sugar sectors.

The production monitoring is critically important in these sectors. It is recommended that independent production monitoring devices be installed to have a cross check with the unique identification markings (UIMs) to ensure that full production is documented and tax paid, the inquiry report added.

Copyright Business Recorder, 2023