Tobacco, poultry sectors accused of evading Rs400bn tax
ISLAMABAD: Chairman of the Federal Board of Revenue (FBR) Rashid Mahmood Langrial, Friday, disclosed massive tax evasion in the tobacco and poultry sectors to the tune of nearly Rs400 billion, reflecting huge tax gap in country's economy.
During a meeting of the National Assembly's Standing Committee on Finance on Friday, the FBR chairman disclosed that out of every 10 trucks of smuggled/ illicit cigarettes, only one is confiscated due to limited manpower of the tax machinery.
The new powers to provinces would help in checking illicit cigarettes at the retail level with the help of provincial law enforcement agencies.
PM Shehbaz orders crackdown on tax evasion, under-invoicing
About the tobacco sector, the FBR chairman stated that an estimated tax evasion of around Rs300 billion is taking place in tobacco sector.
He stated that any cigarette without the mandatory stamp is illegal and indicated that the FBR would seek the assistance of provincial law enforcement agencies to combat the trade of illegal cigarettes.
The FBR is devising a SOP for enforcement with the help of law enforcement agencies. The cost of non-compliance or not paying taxes will increase for tobacco sector and at least 10 percent impact would be seen after enforcement at provincial level.
The Chairman of the Standing Committee, Syed Naveed Qamar, expressed concern that the new authority granted by the ordinance could lead to increased harassment.
The FBR chairman stated that poultry sector, which was liable to pay Rs10 billion in taxes, was only contributing Rs1.3 billion. He pointed out the significant profit margins in the sector, where a chick costing Rs70-80 is sold for as high as Rs180. He attributed this underpayment to the absence of cost accounting in income tax returns within the poultry industry.
The FBR's market intelligence indicated widespread issues in certain sectors, including poultry, where daily production ranges from 800,000-900,000 chicks.
The lack of cost accounting led to substantial under-collection of taxes.
The chairman noted that when the FBR took action, the sales prices declared by the poultry sector were altered.
Officials estimated that the outstanding dues from the poultry sector over the past five years could amount to Rs150 billion, with annual liabilities reaching Rs30 billion.
Copyright Business Recorder, 2025
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