Govt urged to reduce inconsistencies between taxes on input, output in fertilizer industry

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ISLAMABAD: The government has been urged to decrease taxes on utilization of gas as feedstock to end inconsistency between taxes on input and output in the fertilizer industry.

According to the Fertilizer Manufacturers of Pakistan Advisory Council this inconsistency has contributed to accumulation of large refund claims of Rs13 billion, reported Express Tribune.

FMPAC, Executive Director Brigadier Sher Shah shared gas being utilized as feedstock formed 80 percent of the raw material used for urea production.

Mr. Shah said the fertilizer industry was paying Rs114 per bag in tax on input and Rs70 per bag in tax as output and this was causing problems for the industry to obtain tax refunds which had touched a colossal Rs13 billion.

He suggested the authorities to decrease the sales tax on urea to end inconsistencies in input and output taxes, which would ensure accumulation of tax refunds.

A committee was setup by the PM, with National Food Security and Research Minister Sikander Hayat Khan Bosan at its helm.

It proposed a 2 percent flat sales tax on fertilizer sales to reduce the burden on farmers.

The fertilizer industry had appreciated the proposal of output tax restructuring on condition that it be met with a similar decrease on input tax.

The industry was off the view that it had suffered greatly due to high input cost despite being a key contributor to agricultural growth.

The council stated if no tax relief was provided to the fertilizer industry, the rising financial costs would contribute to increase in production costs and consequently cultivation cost wouldn’t remain financially viable.

FMPAC demanded the government to introduce effective measures which would aid in decreasing the input cost, so fertilizer prices could be made globally competitive and Pakistan’s agrarian economy also flourish.

It highlighted for decreasing sales tax on natural gas, re-gasified liquefied natural gas and on other raw material like phosphate rock and phosphoric acid alongside reduction in cess.