The T&T System, operational after three years of development, offers near real-time monitoring of production activities. By providing actionable insights into production data, the system identifies discrepancies and enforces regulatory compliance. During the latest crushing season, FBR took decisive action against non-compliant facilities, sealing production lines at prominent units in Digri and Chashma, which were later unsealed after meeting regulatory standards.
This digital intervention underscores the FBR’s commitment to integrating the sugar industry into a broader digital compliance framework. The system has not only bolstered transparency in reporting but also reinforced tax collection mechanisms, providing critical support to the national exchequer.
The success in the sugar sector mirrors a broader trend across other industries, as the FBR leverages technology to enhance tax compliance. The sales tax collection from the cement sector rose by 59.5 percent to Rs. 66.6 billion in 2023-24, while revenues from the cigarette industry showed even more dramatic increases. Domestic sales tax collection from cigarettes surged by 64.3 percent to Rs. 60.66 billion, and Federal Excise Duty (FED) collection jumped by 66.9 percent to Rs. 237 billion in the same period.
In total, the FED’s contribution to FBR’s overall tax revenue increased from 5.2 percent in 2022-23 to 6.2 percent in 2023-24, with net collections soaring 56.1 percent to Rs. 577.4 billion.
Track & Trace – A Blueprint for Tax Reform Success?
The success of the T&T System in the sugar sector signals a potential blueprint for tackling tax evasion across Pakistan’s industrial landscape. By combining technology with stringent enforcement, FBR has demonstrated the power of digital tools in overcoming entrenched inefficiencies.
However, it also raises a critical question: why has such a system not been rolled out across all major industries? While the T&T System’s application has shown promise in sectors like sugar, cement, and tobacco, expanding its reach could yield even greater dividends. Industries prone to high tax evasion—such as textiles and real estate—remain glaring gaps in FBR’s digital compliance strategy.
Moreover, this achievement should not overshadow the pressing need for holistic tax reform. The focus on digital systems must be paired with efforts to simplify tax processes, incentivize compliance, and address the chronic trust deficit between taxpayers and authorities. Without these complementary measures, the risk of reverting to old inefficiencies remains.
FBR’s success with the T&T System is commendable, but it should be viewed as the beginning of a larger journey towards comprehensive tax reform, ensuring equity, transparency, and growth across all sectors of the economy.
