The Federal government has agreed to reduce general sales tax (GST) on tractors from 17 percent to 5 percent to revive the tractor industry and its allied hundreds of vending units across the country; Chairman Pakistan Association of Automotive Parts and Accessories Manufacturers Nabeel Hashmi told Business Recorder on Friday.
He said the decision was taken on Friday in a meeting of the special committee set up by the Economic Co-ordination Committee (ECC) last month to determine reduction of the GST on the tractors that had crippled the industry since March last year. Talking to this scribe on telephone from Islamabad after attending the meeting, Hashmi said that the government has accepted demand of the tractor manufacturers and PAAPAM that GST should be levied gradually starting with 5 percent on hitherto zero-rated (tax free) tractor industry. He recalled that the tractor industry was not consulted before the imposition of GST and it was only after sudden drop in sales that the industry had approached the government to take action to put this industry back on track.
Welcoming the government's decision, though late, Hashmi said since the 17 percent GST had made the tractors costlier it was having serious repercussions on the engineering industry and the agriculture economy. By the end of the first half of the fiscal year, the production had come down by 80 per cent as compared to last year and assemblers and hundreds of associated industrial units supplying parts to them had come to a grinding halt.
There was also a sharp drop in tractor sales resulting in decrease in government revenues from this sector. Confirming the government's decision a top executive of the Millat Tractors Ltd said that reduction in GST will make the tractors Rs 50,000 to 100,000 cheaper depending on the horse power of the tractor.