FBR has dropped implementation
of electronic monitoring system
as it was not successful

ISLAMABAD   -   The Federal government and Pakistan Sugar Mills Association (PSMA) are still at loggerheads over the mode of introduction of track & trace system in sugar industry as PSMA has proposed printing of local QR code on sugar bag instead of imported stamps. 

“The imported QR printed tax stamps affixation, besides being expensive have complicated affixation process that will peel off as only Hermetical Sealing Fusion Technology can be applied on polypropylene bags. Because of the aforesaid fact, these stamps have never been used on polypropylene sugar bag,” said a letter written by Pakistan Sugar Mill Association to Member IR Operation Federal Board of Revenue.

PSMA has asked the Federal Board of Revenue (FBR) to replace imported stamps with a QR-code based system to save foreign exchange incurred on digital stamps and adopt cheaper and localised options. FBR had demanded the sugar mills to procure tax stamps and unique identification numbers, and install necessary equipment to implement the track and trace system at production facilities.

Through S.R.O. 250(I)/2019 issued by FBR on February 26, 2019 the board had amended Sales Tax Rules, 2006, to lay down the procedure for electronic monitoring, tracking and tracing of production, import and supply-chain of tobacco products, beverages, sugar, fertiliser and cement to contain tax evasion in these sectors. Earlier it was planned to implement the new track and trace system from July 1, 2021, however due to differences over the implementation mode it was not implemented so far.

“We thank you for the implementation of track and trace system in place of video electronic monitoring. We assure FBR of our continued support and highly appreciate your resolve to document the economy,” the letter added. “We document that the printing of QR code on sugar bag is the only cost effective and practical solution,” he said

FBR has dropped the implementation of electronic monitoring system, as it was not successful. However, in pursuance of FBR instructions, most of the sugar industry have already incurred cost for installation of electronic monitoring system and now seeks reimbursement from FBR/authorised vendors or alternatively as an adjusted in the sales tax, said chairman PSMA. 

It is worth to mention here that earlier in a letter, addressed to the Prime Minister of Pakistan Imran Khan; PSMA has proposed that “We seek your support for the implementation of our proposal in the federal budget 2021-2022 that would eliminate tax evasion from all the industrial sectors using environment friendly and recyclable polypropylene bags for packaging their products. 

“We have requested Federal Board of Revenue (FBR) to place a mandatory requirement for all the polypropylene factories to print Quick Response code (QR code on bags produced for sugar, fertiliser, cement, wheat flour, wheat, pulses, rice and animal feed etc,” the letter said.  

‘The installed OR code machine will be connected with a computer system having software to generate sales invoice,  showing price and quantum of sales tax that’s documented in the QR code be verifiable / readable via mobile phone application enabling FBR  back track each and every polypropylene bag produced for the industrial packaging. 

Subsequently, cameras can be installed on the production lines of the aforesaid sectors to record the real time packaging However, until such time when cameras can be installed in order to assist in eliminating tax evasion, we request for the immediate notification of QR code printing requirement for all polypropylene manufactures, the letter proposed.