Punjab government has sent a letter to the Ministry of Finance for abolishing general sales tax (GST) on agricultural inputs in the upcoming budget. Not would this only help in fueling agricultural growth but also contribute to improving farming productivity.
As per the provincial government, GST on agricultural inputs has decreased the ability of Pakistani farmers to compete with other regional countries due to increasing cost of commodities and production. For example, as per an agricultural department’s data sheet, the cost of basmati rice in Punjab was higher at Rs 1,371 per 40 kg’s in comparison to Rs 901 per 40 kg’s in India. The agricultural department highlighted that the reason for local farmers being uncompetitive was due to enactment of GST on oilseeds, fertilizers, agricultural machinery and tractors.
In the letter, the Punjab government also mentioned that around Rs 25.19b under GST was being collected from the fertilizer sector against a forecast of Rs 45.1b. A subsidy of Rs20b was being granted on phosphate fertilizer which is equivalent to 20pc of the cumulative agricultural inputs.