Sales tax: Tractor industry urges release of refunds

LAHORE: The Pakistan Automotive Manufacturers Association (PAMA) has appealed to the government for immediate release of the tractor industry’s pending sales tax refunds, which amount to over Rs3 billion.

In a letter written to Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan, PAMA Director General Abdul Waheed drew attention to constraints on the indigenous farm tractor industry regarding the blockage of sales tax refunds.

“Accumulated sales tax refunds are still rising as the process has completely stopped in November 2017, resulting in a liquidity crunch which is unsustainable and adding to costs substantially,” DG PAMA stated.

Agricultural tractors are subjected to sales tax at the rate of 5% while a tax of 17% is levied on procurement of required parts, both local as well as imported ones.

Consequently, in one unit, the amount of input tax is always higher than the output tax. The outcome is an anomaly on a perpetual basis and refunds are increasing on a regular basis. “We have been pleading through our budget proposals, year by year, for removal of this anomaly but so far, our requests have not been paid heed to. 

Published in The Express Tribune, May 3^rd, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.