Tax on tractors exacerbates industry problems
The government has also introduced a new definition of tax fraud, which now includes the intentional evasion of legally due tax or obtaining an undue refund by submitting false documents, false returns, or withholding correct information. photo: REUTERS
Manufacturers of tractors and their parts are experiencing a deep crisis, which is threatening stability and future of a sector that plays a crucial role in Pakistan’s economy.
With substantial exports valuing at $20 million, a robust vendor base numbering 200 and employment for around 200,000 people, the industry has achieved an impressive 95% localisation.
These thoughts were expressed by the leadership of Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) during their visit to Sheikhupura plant of Millat Tractors on Tuesday.
Association leaders said that imposition of 10% sales tax on tractors in budget announcement for fiscal year 2024-25 had exacerbated the situation. Previously, tractors were exempt from sales tax until June 2024, ensuring smooth operations and financial stability for manufacturers.
However, the new tax policy has pushed Millat Tractors back into the refund regime Consequently, operations have been halted at Millat Tractors since July 1 with no orders or invoices issued, causing significant financial losses.