LAHORE: Stakeholders of the fertiliser industry have said that they will be forced to increase prices if the budget for 2021-22 failed to address the longstanding issues pertaining to the sales tax regime, non-payment of subsidy and delay in release of sales tax refund.
In a letter sent to Finance Minister Shaukat Tarin, Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) Chairman Tariq Khan pointed out that the stuck tax refunds had caused cash flow challenges for the manufacturers.
“The mismatch between general sales tax on inputs and outputs has resulted in refundable dues of over Rs38 billion,” the letter stated. “Currently, the industry is paying input tax of Rs100-186 on a bag of urea, which is four to five times more than the output tax of Rs33 per bag for natural gas and RLNG-based fertiliser production.”
If the Federal Board of Revenue (FBR) fails to harmonise the sales tax regime before the budget is approved by parliament, the fertilser sector will be forced to pass on the impact of rise in finance cost to farmers in the form of hike in urea prices, he stated.
Khan appreciated the finance minister for automating refund processing and issuing tradable bonds to settle a large amount of sales tax refunds for the industry.
Moving on to the non-allocation of budget to cover past subsidy of Rs19 billion, the letter added that the government’s commitment remained unfulfilled to date, which shook the confidence of local industry.
“We request the finance minister to issue directives to the authorities to expedite the settlement of outstanding subsidy claims through the Ministry of National Food Security and Ministry of Industries and Production via issuance of tradable bonds,” he said.
