Digital Tracking and Tracing: A Transformational Shift at Sindh Revenue Board (SRB)

Aftab Anwar Baloch

The digital age has profoundly influenced how governments and businesses operate globally, with an emphasis on increasing transparency, efficiency, and accountability. In Pakistan, these advancements have been making their way into governmental institutions, revolutionizing their workflows. One such institution that stands at the forefront of this change is the Sindh Revenue Board (SRB), particularly through the introduction of digital tracking and tracing mechanism. This article will explore in-depth the advent and implementation of digital tracking and tracing at the SRB, its impact on governance and revenue collection, and the challenges and opportunities it presents for the government and taxpayers alike.

Introduction to the Sindh Revenue Board (SRB)

The Sindh Revenue Board (SRB) is the primary revenue collection body for the Sindh government, established in 2011. Its core mandate is to collect the Sindh Sales Tax on services, a crucial contributor to the province’s revenue. Over the years, SRB has evolved its role from a traditional tax collection agency to a more sophisticated body by integrating advanced technologies and practices that streamline tax collection, ensure compliance, and encourage greater transparency.

One of SRB’s key achievement has been its constant focus on digitalization. The advent of digital tracking and tracing within the SRB is part of its broader agenda to modernize revenue collection processes and combat tax evasion. This system aims to address the longstanding challenges associated with manual processes, including data inconsistency, delays in tax filings, and tax fraud. Digital tracking and tracing systems are now being introduced as a solution to these issues and promise to improve revenue and  governance in Sindh.

Understanding Digital Tracking and Tracing System

A digital tracking and tracing system is a technological solution designed to monitor the movement of goods and services throughout a supply chain. From the point of production to final consumption, every stage is documented electronically, providing real-time visibility to both the government and relevant stakeholders. This system typically includes features like digital invoices, barcoding, product serialization, and digital filing platforms, all of which help ensure that taxable transactions are accurately recorded and reported.

The primary objective of such system is to enhance tax compliance by eliminating opportunities for tax evasion and under-reporting. In sectors such as tobacco, beverages, and petroleum, tax evasion is rampant due to under-invoicing, misreporting, and  manipulation of tax records. Digital tracking and tracing aim to mitigate these issues by ensuring that every transaction is accounted for.

For revenue bodies like the SRB, digital tracking and tracing system serve several functions:

1. Monitoring of Economic Activity: This system give the SRB the ability to monitor sales and services in real-time, providing accurate data about taxable activities across the province.
2. Prevention of Tax Evasion: By digitalizing the entire process, it becomes much harder for businesses to evade taxes or manipulate their taxable income.
3. Efficient Auditing and Compliance: Digital tracking provides robust tools for audits, as electronic records can be quickly retrieved and verified. This allows SRB to focus its audits more efficiently, targeting high-risk areas.
4. Increased Transparency: Digital record of transactions create a trail that enhances transparency for both tax authorities and businesses. This system strengthens the trust between taxpayers and the tax authority, encouraging more voluntary compliance.

The SRB’s Adoption of Digital Tracking and Tracing

In an effort to bolster its revenue collection capabilities, SRB has actively sought to digitalize its operations, with tracking and tracing forming a cornerstone of these efforts. SRB’s digital tracking and tracing system primarily targets undocumented sectors such as beauty parlours, gyms, security services, and restaurants. By bringing these sectors into the digital fold, SRB aims to curb underreporting and improve overall tax collection. Presently, POS integration/track & trace is integrated to limited restaurants, beauty parlours and gyms/fitness centres.

The Sindh government, along with the SRB, has developed software inhouse using external resources to roll out the digital tracking and tracing platform. The system integrates various tools like electronic invoicing (einvoicing), barcoding, and QR code scanning to track transactions in realtime. For businesses, this means that they can no longer manipulate records or evade taxes by providing under-reported data, as every transaction is now documented and accessible by  the SRB.

Impact of Digital Tracking and Tracing on Revenue Collection

The introduction of digital tracking and tracing has had a profound impact on the SRB’s revenue collection. In particular, it has provided a platform that simplifies tax collection and ensures that businesses report accurate information.

1. Reduction in Tax Evasion: One of the primary drivers of digital tracking system is to reduce tax evasion. With the implementation of such system, businesses can no longer evade taxes by underreporting sales or manipulating records. This has led to an increase in the number of tax-compliant entities, significantly enhancing the revenue collection capacity of the SRB.
2. Enhanced Efficiency: Traditionally, SRB relied heavily on manual processes for audits and inspections. This often led to delays in tax collection and inaccurate data and assessments. The digital tracking system has automated several of these tasks, leading to quicker audits and more accurate tax assessments.
3. Increased Transparency and Trust: One of the key benefits of the digital system is the transparency it brings to the tax collection process. Both taxpayers and the SRB can access records, review transactions, and ensure that taxes are paid fairly. This increased level of transparency builds trust among taxpayers, encouraging more voluntary compliance. In fact, with invoices being QR-coded transparency has been extended to general public and a customer can instantly verify by scanning QR-code that the sales tax collected from him has been duly reported to SRB. This builds up pressure on businesses to report all transactions.
4. Data-Driven Decision Making: With access to real-time data, SRB can now make more informed decisions when it comes to tax policies and audits. This allows SRB to target sectors and businesses that are at high risk for tax evasion, ensuring that tax collection is optimized.

The below bar chart displays the comparative revenue collection and registration growth in the during the FY 2022-23,  2021-22 and 202021.

Challenges in Implementing Digital Tracking and Tracing

While the benefits of digital tracking and tracing are immense, its implementation is not without challenges. The introduction of any new system, especially one that disrupts traditional methods, is often met with resistance. In the case of SRB, several obstacles have been observed:

1. Technological Barriers: The implementation of a digital tracking system requires significant technological infrastructure, including high-speed internet, robust server capabilities, and secure databases. In many parts of Sindh, internet infrastructure remains underdeveloped, posing a challenge to full-scale implementation.
2. Cost of Implementation: For businesses, particularly small and medium enterprises (SMEs), the cost of adopting digital tracking tools can be significant. However, this has not been major barrier to adoption.
3. Training and Education: A major hurdle in implementing digital systems is the lack of familiarity with digital tools among both government officials and business owners. SRB has had to conduct training sessions to educate its staff and stakeholders on how to use these systems effectively. Without proper training, the benefits of these systems can be limited.
4. Resistance from Stakeholders: The transition from manual to digital systems often faces resistance from businesses and stakeholders who have traditionally benefited from the inefficiencies of the previous system. Some businesses may actively resist the new system in fear of increased tax liability and scrutiny.
5. Cybersecurity Threats: As with any digital system, cybersecurity is a significant concern. The sensitive data being collected and transmitted through the digital tracking system must be protected from potential cyber threats. SRB will need to invest heavily in cybersecurity measures to ensure the integrity of the system.

Overcoming the Challenges

The SRB has taken several steps to address the challenges mentioned above. Firstly, the government has invested in upgrading the technological infrastructure in key business areas, ensuring that businesses and SRB officers can access the digital tracking and tracing system seamlessly. Additionally, the SRB has provided financial incentives and subsidies to businesses, particularly SMEs, to help offset the cost of adopting new technologies.

Training programs have been rolled out to ensure that both SRB staff and businesses understand the digital tools at their disposal. These programs not only focus on how to use the technology but also emphasize the long-term benefits of digitalization, including greater efficiency, reduced costs, and compliance with tax regulations.

The SRB is also collaborating with national and international cybersecurity experts to ensure that the data being processed by the digital tracking system is secure. By doing so, the SRB hopes to build confidence in the system, both among businesses and the public.

The Future of Digital Tracking and Tracing at SRB

The digital transformation at the SRB is still in its early stages, but the results so far have been promising. As the system matures, it is expected to bring about even greater improvements in tax collection and governance. With continuous improvements in technology and infrastructure, the SRB’s digital tracking and tracing system could serve as a model for other provinces and even federal tax authorities in Pakistan.

In the long term, digital tracking and tracing can help create a more transparent and accountable tax system in Sindh, one where taxpayers are confident that they are being treated fairly, and where the government can effectively collect the taxes that it is owed. The benefits of such a system extend far beyond revenue collection. A wellfunctioning digital tracking and tracing system will foster a culture of compliance, where businesses are incentivized to operate within the legal framework, contributing to the province’s economic growth and development.

Conclusion

Digital tracking and tracing at the Sindh Revenue Board marks a significant step towards modernizing tax administration in Sindh. By leveraging technology, SRB is not only enhancing its revenue collection capabilities but also promoting transparency and trust between the government and taxpayers. While challenges remain, the potential benefits of this system far outweigh the difficulties associated with its implementation. With continued investment in technology, infrastructure, and training, SRB’s digital tracking and tracing system is set to revolutionize tax administration in Sindh, paving the way for a more efficient, fair, and prosperous future.