The special committee finalised the report on tobacco sector for submission in the House here on Tuesday.
Senator Kulsoom Parveen is the chairperson of the special committee formed on causes of decline in tax collection from tobacco sector.
The committee recommended to impose taxes on production and supply of cigarettes in erstwhile tribal areas. The committee further recommended that the government should talk with the top officials in Azad Kashmir including its chief secretary for bringing these manufacturing units into the tax net.
It has recommended track and trace system for the tobacco sector for monitoring of the production, supplies and payment of taxes on cigarettes.
The daily production of cigarettes by the multinational companies be assessed and documented on the basis of record to be made available to the concerned authorities.
The production of tobacco be checked with the help of data of imports and exports of this item.
The committee also wanted the FBR to revisit the SRO 1149 (1)/2018 after Pakistan Tobacco Board stated that it would lead to decline in export of tobacco.
Federal Board of Revenue (FBR) informed the committee that 66 percent people are doing legitimate business in tobacco sector and they are paying 98 percent tax and the rest 34 percent are paying just 2 percent tax.
The chairman also stated that legitimate industry (multinational companies) production has been declined which also led to decline in tax collection from the sector.
They said that the department is collecting four types of taxes including Federal Excise Duty (FED), Sales tax, Income Tax and Regulatory Duty (RD) from this sector.
Tax officials further told the committee that though cigarette production of multinational companies has been declining, their profit has been increasing.
The FBR officials also stated that revenue of Rs 115 billion is expected from tobacco sector while Rs 4 billion would be collected from other companies.
The sector is also one of the main contributors to the government exchequer and provided Rs 88 billion in FED/Sales tax in 2017-18.