- Tax collection sees 54% rise despite stable sugar sales volumes.
- Sugar industry in Pakistan wields significant political influence.
- Authorities intensify crackdown on tax evasion in sugar industry.
ISLAMABAD: There has been massive tax evasion in sugar sector as the newly implemented monitoring and enforcement system for the sugar sector has boosted tax collections by 54%.
Official sources said that since sales tax is levied on sugar sales, Rs24 billion was collected in January and February 2025, compared to Rs15 billion in the same period last year — a 54% increase despite stable sugar sales volumes.
The sugar industry in Pakistan wields significant political influence, especially in Punjab and Sindh, where several high-profile politicians, including members of the ruling Sharif family, own sugar mills.
The sources said that PM Shehbaz Sharif personally reviews on weekly basis FBR crackdown on tax evasion in sugar sector. An apparent response to the FBR’s action, the sugar cartel is alleged to have managed increase in price of sugar in open market.
In response to this move from sugar cartel, a source said and a federal minister confirmed that the prime minister has directed ministries concerned to consider importing raw sugar from abroad if the sugar millers do not behave.
Authorities have intensified their crackdown on tax evasion in the sugar industry, confiscating over 100,000 empty bags bearing Track and Trace stamps during the ongoing crushing season. This fraud was allegedly designed to manipulate production records and evade taxes.
According to the sources, ten chutes/hoppers in six sugar mills have been sealed as part of the recent enforcement measures. Two of these hoppers, which were not linked to the official monitoring system, were first sealed and later dismantled.
As part of the latest enforcement actions relating to the sugar Industry, a combined operation by the Federal Board of Revenue’s (FBR) Inland Revenue Enforcement Network (IREN) and the Intelligence Bureau (IB) led to the seizure of 52,410 sugar bags. These were later released after the recovery of penalties exceeding Rs125 million, in addition to the sales tax payable on the sale of sugar.
Furthermore, authorities claimed to have placed an embargo on the godowns of three sugar mills to recover Rs700 million in sales tax dues. A total recovery of over Rs2 billion has also been made from previous tax periods.
Meanwhile, total sugar production for the current season has reached 5.7 million metric tons. When combined with last year’s stock, according to the sources, this is deemed sufficient to meet the country’s sugar demand for the season.
Following a directive from Prime Minister Shehbaz Sharif, the FBR launched an enhanced production monitoring system at the start of the 2024-25 crushing season. Currently, five oversight mechanisms are in place to curb tax evasion:
- Track and Trace Stamps to monitor production.
- Automated Counters at Hoppers to track number of produced bags.
- Video Recording and Digital Eye Counting for real-time verification.
- s-Track Invoicing System to monitor sugar dispatches.
- On-Site FBR Staff overseeing manufacturing and sales.
The Federal Investigation Agency (FIA) and the Intelligence Bureau (IB) are also monitoring operations to ensure transparency, a source said, adding, “To prevent collusion, FBR officers stationed at mills are rotated every ten days, while CCTV surveillance and surprise inspections by senior officials further tighten oversight.
Authorities are also investigating whether sugar is being sold to genuine distributors or hoarded for price manipulation. The enforcement network is now monitoring the entire supply chain to prevent any form of tax evasion or stockpiling.
This ongoing crackdown signals the government’s intent to curb financial misconduct in the sugar industry and ensure that revenue losses from tax evasion are minimised, sources said.
Originally published in The News
