PTI govt approves Rs1.5b subsidy on tractors

Aims to promote mechanisation, enhance per acre crop output

ISLAMABAD:

The government under its agricultural fiscal package has approved Rs1.5 billion sales tax subsidy on locally manufactured tractors to promote mechanisation in the agriculture sector and to enhance per-acre crop output in the country.

In a statement issued by the Ministry of National Food Security and Research, the ministry said that the government had announced a fiscal package of over Rs1,200 billion in the wake of the Covid-19 pandemic.

Out of this package, an amount of Rs50 billion was earmarked for relief to the agriculture sector. The Economic Coordination Committee (ECC) in its meeting held on May 13, 2020, had approved the proposals submitted by the Ministry of National Food Security and Research and were ratified by the cabinet.

Under the package, sales tax subsidy at a rate of 5% to locally manufactured tractors was also approved for one year. At present 5% sales tax is applied on the sale of each tractor. There are two main manufacturing units in Pakistan including Massey Ferguson and Al-Ghazi having a market share of 60% and 40%, respectively.

At present 5% sales tax is applied on the sale of each tractor and an annual sale of both the units during 2019 was 41,000 units and average sales tax is around Rs60,000 per tractor.

Published in The Express Tribune, July 26^th, 2020.

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