The Federal Board of Revenue (FBR) has increased the sales tax on tractors from 10% to 14% for both imported and locally supplied units, aiming to align with demands from local manufacturers.
This decision, detailed in the newly issued SRO 1643(I)/2024, is set to push up the cost of agricultural tractors, impacting financially strapped farmers and growers.
According to the FBR’s SRO 1643(I)/2024, the federal government has enhanced the rate of sales tax with respect to the imported and local supply of tractors under PCT headings 8701.9220 and 8701.9320 and under S. No. 86 of Table-1 of the Eighth Schedule to the Sales Tax Act, 1990 from 10% to 14%, respectively.
The FBR has also streamlined processes by eliminating the “Refund to Agricultural Tractor Manufacturers” procedures and related audits through SRO 1644(I)/2024.
The tax adjustment specifically targets tractors under certain PCT headings, raising their sales tax significantly. This move has been met with opposition from the agricultural sector, citing previous tax relief measures that were not passed on to farmers by manufacturers, leading to higher costs and reduced agricultural output.
This tax increase is seen as another financial burden on a sector already under strain, potentially leading to reduced food production and increased reliance on imported agricultural products, further straining Pakistan’s foreign exchange reserves.
The farming community is calling for the FBR to reconsider its decision to ensure the sustainability of Pakistan’s agriculture and alleviate the financial burden on its farmers.
