KARACHI: The import of completely built up (CBU) tractors is now allowed at 5 per cent duty while parts for local tractor production are subjected to 17pc general sales tax and 10pc duty.
Al-Ghazi Tractors CEO and Managing Director Mohammad Shahid Hussain said this is not logical and it clashes with the policy of localisation. He urged the government to implement a zero rate on parts or levy a 5pc duty in line with CBU import.
He said a cut in GST to 5pc from 10pc would revive the tractor industry and support farm mechanisation.
He pointed out that an anomaly between input and output tax. The new sales tax would create cash flow problems for the manufacturers. He further added that since input tax is levied at a much higher rate against output tax, considerable refunds from the government are increasing on a regular basis.
The industry was already suffering from a GST blow and a stoppage of substantial refunds. The GST revision only on tractor makes it difficult for the industry to sustain its operations.
He said the budget proposal by tractor makers called for a reduction in the rate of input taxes on the purchase of components (local and imported). The proposal, if implemented would help the cash-starved industry to attain yearly refunds of up to Rs700 million which would enable manufacturers to innovate further and provide more useful and cost-effective options to local farmers.