ISLAMABAD - Following the immense pressure from various quarters, the Federal Board of Revenue (FBR) is likely to abolish advance tax on tobacco in the budget (2019-20) through Finance Bill 2019, sources said on Sunday.
The advance tax of Rs 300 per kg is applicable only on the tobacco that enters the Green Leaf Threshing (GLT) plant. All manufacturers who purchase tobacco from farmers must process tobacco through GLT before it is used for manufacturing of cigarettes.
“The measure has been instrumental in documentation of the purchase of tobacco by manufacturers of cigarettes and other tobacco products. It is an adjustable tax having no additional burden on the manufacturers,” the sources said.
They explained that local cigarettes manufacturers are pursuing the FBR through some political quarters for withdrawal of this major documentation measure in the budget. “The FBR may propose abolition of the adjustable tax, but it would again result in massive tax evasion and supply of non-duty paid tobacco from GLT units,” they asserted.
The FBR in 2010 had issued an SRO with the objective of documentation of record of the tobacco and to monitor as well as curtail the manufacture and sale of non-duty paid cigarettes. FBR is able to track and penalize the non-duty paid cigarette manufacturers that resort to underhanded tactics by making illicit purchases subsequently leading to tax evasions in payments made.
The sources said that the cigarette manufacturing factories operating their own GLT units would be required to issue invoices and pay duty as per rule and maintain separate invoice book.
Under the procedure, 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 tax invoice of un-manufactured tobacco, stock transport advice-cigarettes, sales-cum-transport invoice shall be generated through FBR’s e-portal.
The invoices and advices as prescribed shall bear unique and distinguishable serial numbers. Provided that till such time, the FBR’s e-portal is not developed for the transactions stipulated herein, or in the event of a natural disaster, national calamity or a government ordered network and data services shutdown, which result in severed internet connectivity, the manually prepared invoices or advices, duly authenticated by the officers posted, may be used and the same should be uploaded when the connection is restored, the FBR added.
