ISLAMABAD: The Federal Board of Revenue (FBR) Wednesday increased sales tax from 10 to 14 percent on import and local supply of tractors, which would ultimately increase agricultural tractors’ prices for the poor farmers/ growers.
The FBR has issued an SRO 1643(I)/ 2024 here on Wednesday, fulfilling the demand of local tractor manufacturing companies.
Through another notification issued by the FBR on Wednesday, the FBR has also abolished the procedure of “Refund to Agricultural Tractor Manufacturers” and checks including pre-refund audit, cost audit and post-refund audit of the tractor manufacturers.
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The FBR has rescind its Notification No SRO 563(1) 2022, dated the 29th April, 2022 through SRO 1644(I)/2024.
On the conclusion of Senate Standing Committee of Finance held at the Parliament House on Wednesday, senior tax officials told Business Recorder that the increase will not affect prices of tractors. The issue of refund of the said industry has been resolved through this measure, FBR Member added.
On the other hand, Sindh Chamber of Agriculture Hyderabad strongly reacted and asked the Senate Standing Committee of Finance to direct FBR for withdrawal of the decision having direct negative implications on imported as well as local agricultural tractors’ procured by poor farmers/ growers. The FBR has given free hand to local companies by abolishing SRO 563(1)2022, which had placed checks on the industry, it added.
According to the FBR’s SRO 1643(I)/2024, the federal government has enhanced the rate of sales tax in respect of imported and local supply of tractors under PCT headings 8701.9220 and 8701.9320 and under S. No. 86 of Table-1 of the Eighth Schedule to the Sales Tax Act, 1990 from ten per cent to fourteen per cent, respectively.
Strongly reacting to the decision, Sindh Chamber of Agriculture (SCA) has approached Senate Standing Committee of Finance to intervene for the withdrawal of the FBR’s notification. They have also informed the committee about abnormal increase in prices of agricultural tractors with imposition of 10 percent sales tax and also opposing the proposed sales tax increase of up to 14 percent on tractors.
In a communication to Senate Standing Committee of Finance, Nabi Bux Sathio Senior Vice President Sindh Chamber of Agriculture Hyderabad expressed serious concerns and opposed further increase in sales tax rate from 10 to 14 percent on these tractors.
The chamber informed that prior to June 30, 2022, the goods were classified under Eighth Schedule of Sale Tax Act, 1990 and 5 percent sales tax was charged to the agricultural farmers of Pakistan.
Thereafter from July 1, 2022 onwards it was brought under Sixth Schedule in Finance Act 2022 whereby exemption of sales tax was allowed at Serial No. 170.
This exemption in the Sixth Schedule supported the local manufacturers of agricultural tractors in Pakistan.
The local manufacturer of tractors did not pass on the benefit of the said facility to the farmers (purchaser of Agricultural Tractors). The local manufacturers had added the exemption amount in the cost of the tractor and made absorbent profits for themselves instead of farmers, Senior Vice President Sindh Chamber of Agriculture stated.
From July 1, 2024 the government increased he rate of sales tax to 10 percent. The local manufacturers who had already illegally included the 18% previous tax in the cost of the agricultural tractor have now once more added another 10% in the price, Sathio stated.
Despite the fact that they had already included the exempted amount under Sixth Schedule to their selling prices.
It has come to in knowledge of the farmers’ association that the local manufacturer of tractors are using their influence and further increased the rate of sale tax by additional 4% to bring the sales tax rate from 10% to 14%, it said. The increase of sales tax on tractors is in violation of SRO.563/2022, which specifically issued to provide maximum benefits to farmers.
Under SRO 563/2022, the sales tax has to be reduced for farmers only. This benefit is not given to the farmers and that all the increase in price will have direct effect on increase of agriculture products. This will reduce food production in Pakistan and consequently Pakistan would spend its foreign exchange to purchase imported agriculture food products.
In the light of these facts, the SAC requested that FBR may inquire in this matter and save the farmers and the agriculture products of Pakistan and not to increase the sales tax for agricultural tractors as this will create huge burden on the farmer community of Pakistan who is already suffering huge problems at present.
Copyright Business Recorder, 2024
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