KARACHI: Tractor industry’s outstanding sales tax refunds worth Rs3 billion are resulting in huge operational challenges as the cost of doing business is increasing, Pakistan Automotive Manufacturers Association (Pama) Director General Abdul Waheed Khan said.
In a letter to Finance Minister Ishaq Dar, he said that with the recent reduction in sales tax rate on supply of tractors, tractor manufacturers are charging sales tax at the rate of 5 per cent on supply of tractors as against the input tax on purchases of components at 17pc, both local and imported.
Since input tax is at a much higher rate as against the output tax, refunds are consistently accruing and increasing on a regular basis.
“Ultimately the burden of such undue cost would be borne by the end consumer i.e. farmer who is already facing challenges on account of depressed commodities prices and increased input cost. This burden is also nullifying the various supportive initiatives taken by the government to improve the financial health of farmers,” the letter said.
To minimise the accumulation of refunds, he said the tractor industry is continuously urging the government to reduce rate of input tax on purchase of imported components by tractor manufacturers to match the reduced rate of 5pc.
