• Regularising Green Leaf Threshing Units (GLT) is crucial to combat illegal cigarette sales.
• The FBR is debating whether or not to collect tax at the GLT stage.
• Another suggestion is to increase the adjustable FED on tobacco to at least Rs500 per kg.

KARACHI: In the 2019 budget, the government is mulling a proposal from the documented tobacco sector to levy a Rs300 advance adjustable FED on tobacco at the green leaf threshing stage (2022-23).

Regularising Green Leaf Threshing Units (GLT) is crucial to combat illegal cigarette sales. GLTs are a source of fundamental raw material for cigarette makers all throughout Pakistan. The FBR is debating whether or not to collect tax at the GLT stage.

According to the Finance Act of 2019, a Rs10 per kg advance tax on tobacco purchases has been introduced, which has no influence on farmers because only cigarette makers bring tobacco for GLT processing and are responsible for paying this adjustable FED.

The government hiked the advance tax to Rs300 per kg in 2018, however illicit cigarette manufacturers successfully lobbied for a reduction to Rs10 per kg from Rs300 per kg. Another suggestion is to increase the adjustable FED on tobacco to at least Rs500 per kg, which would increase the cost of tax evasion even more.

Read More: Tobacco companies contribute to global pollution

According to sources, this advance adjustable tax only applies to tobacco entering the GLT factory. Tobacco must be processed through GLT by all firms who buy it from farmers before it can be used to make cigarettes.

The measure has aided in the documentation of tobacco purchases by cigarette and other tobacco product makers. It is a regressive tax that imposes no additional burden on manufacturers and has no connection to farmers.

The manufacturer is obligated to pay the FED to the FBR as soon as his tobacco enters the GLT for processing into useable tobacco. This tax is refundable and modifiable, and it imposes no additional costs on manufacturers. It does, however, inform the FBR of the quantities acquired and being processed by all firms.

For the latest Business News Follow BOL News on Google News. Read more on Latest Business News on oldsite.bolnews.com