The Ministry of National Food Security and Research (MNFS&R) has proposed not to levy General Sales Tax (GST) and Gas Infrastructure Development Cess (GIDC) on urea in the budget 2016-17 to be announced on June 3 with the objective of reducing farm input costs. According to an official document, currently the price of urea fertiliser is very high due to imposition of a number of taxes including GST at the rate of 17 percent and GIDC. The overall tax quantum of GST was Rs 32.05 billion and GIDC was Rs 41.04 billion, it said.
If the government removes GST and GIDC then the price of 50kg urea bag, which is Rs 1850 at present, will decline to Rs 1150. The Ministry of Finance and National Food Security and Research have jointly developed a proposal to reduce urea price in view of a sharp decline in the international urea price, the document argued. MNFS&R has also proposed that the current subsidy on phosphatic fertiliser to the tune of Rs 20 billion on 50 percent share basis picked up by the federal and provincial governments may be continued in the next budget.
In the wake of an increase in cost of production, the Ministry also proposed that the GST on Di-ammonia Phosphate (DAP) and other fertilisers at an estimated impact of Rs 14.4 billion and Rs 6.08 billion respectively on the farmers may be removed. The Ministry also proposed to remove seven percent GST on import of pesticides. The SRO 565 (I)/2006 for raw material (Form "F") should not be withdrawn which ensures reduction in tax on pesticides ingredients.
MNFS&R has further proposed that duties/taxes levied on import of agriculture machinery/equipment and GST levied on locally manufactured agriculture machinery/equipment may be withdrawn to ensure availability of farm machinery at affordable prices to the farming community. GST levied on locally manufactured tractors may be reduced from 10 percent to seven percent to ensure supply at affordable prices to the farming community. To ensure supply of quality tractors to the farming community, it proposed that duty free import of EURO-II and EURO-III compliant tractors may be allowed irrespective of the horsepower.
Duties (customs/sales/withholding) levied on import of tractors may be reduced from 34 percent to 20 percent to enable farmers to purchase imported tractors for promotion of tractorization as per Food and Agriculture Organisation (FAO) recommendations and to bring more area under cultivation to ensure food security in the country, the Ministry further proposed.