LAHORE: The authorities have failed to stop the influx of illegal cigarettes from Azad Jammu and Kashmir (AJK) to other parts of the country, which is a burden on the national exchequer in the form of billions of rupees in annual deficits.

Elements involved in the illicit trade of cigarettes are becoming a burden on the economy, taking advantage of tax breaks for products manufactured in AJK. No significant steps have been taken to curb the illegal supply of cigarettes from Azad Jammu and Kashmir to taxable areas of Pakistan, sources said.

As per statistics, illegal sale of cigarettes in Pakistan is causing an annual loss of Rs 80 billion to the national exchequer. In January 2021, the FBR issued a comprehensive monitoring mechanism in the form of SRO 96 (I) 2021 to curb illegal smoking in taxable areas from Azad Jammu and Kashmir but unfortunately said SRO couldn’t execute in true sense. Under this SRO products from Azad Jammu and Kashmir and other tax-exempt areas cannot be supplied to other parts of the country without registration and payment of sales tax.

According to experts, the country is facing a lack of resources and a high fiscal deficit. Cigarettes manufactured in the factories of AJK are being supplied all over the country; hence, alternative system of supervision of officers is required to be devised. According to them, the damage to the national exchequer could be significantly reduced by curbing the smuggling of cigarettes from AJK to other parts of Pakistan.

Source: Business Recorder – Jan 14, 2022