The sugar industry has demanded government documentation of gur industry to increase sugar production and sales tax collection along with foreign exchange earning through exports to Afghanistan, sources told Business Recorder here on Saturday.
In fact gur manufacturing is medium scale industry and not cottage industry exempted from duties and taxes. Pakistan Sugar Mills Association (PSMA) proposes following measures in the upcoming budget:
Sales Tax Act provides no exemption to large-scale commercial gur manufacturing. Therefore, FBR can collect sales tax at the mandi level, as gur trading is limited to a few large mandis and administratively it is possible to enforce collection to create a level playing field for gur and sugar industry.
In the coming years, the country will be facing severe food shortage and the continuing diversion of sugarcane towards gur manufacturing will render our market short of sugar. To meet domestic sugar demand imports would take place at the cost of precious foreign exchange.
Documentation of gur industry would ensure availability of sugarcane to the sugar industry to increase its sugar production. During 2007-08, the Peshawar valley sugar industry instead of producing 125,000 tons of sugar, because of diversion of sugarcane towards tax free gur industry, produced only 39,526 tons of sugar. Government is losing revenue from the Peshawar Valley Sugar Industry because of diversion of sugarcane towards tax-free gur industry.
Loss of revenue to the FBR in sales tax and income tax is estimated to the tune of Rs 900 million and Rs 20 million in terms of road cess to the NWFP government, whereas, loss of foreign exchange earning from the export of molasses is to the extent of US $3.3 million.
Losses estimated due to lesser sucrose extraction by the mechanised commercial gur crushers vis-à-vis sugar industry cost Rs 2.4 billion to the nation, as approximately sugarcane having 100,000 tons of sugar value was burned under the pans to manufacture commercial gur. Moreover, exports to Afghanistan need to be regularised through banking channels to earn precious foreign exchange, the industry added.