MULTAN: Government decided to reduce the general sale tax (GST) on tractors to 10% from already 17%, for FY 2014-2015 to enhance the tractor industry, directly linked to agricultural progress.
As per details, the federal government has initially decided to cut general sale tax on the manufacturing of tractor to enhance the agricultural growth and to improve tractor industry.
Previously, tractor industry was being charged with 17% GST on manufacturing of tractor but now with its Agro-industry friendly steps, government decided to reduce it to 10%.
Moreover, Al Ghazi and Millat tractors,most prominent tractor manufacturers in country, have already shown their concerns over tractor’s sale and industry’s future as prices were very high for farmers to buy new agricultural equipments.
Consequently, reducing sales tax will affect tractor sale to great extent and it was estimated that about 65000 tractors will be sold out in the FY 2014-15. As reduction of GST will save Farmers Rs35000 per tractor, it will help reforms in agriculture sector, improving its GDP share.
The manufacturers of tractors have been demanding reduction in sales tax for long as the sales went down with price hike, adding that tax relief will help industry and agriculture flourish in country.
Furthermore, the revival of industry means employment generation in the 300 plus traders and several other related industries, improvement in government revenues, and improvement to the agriculture sector increasing its productivity and creating agricultural employment in rural Pakistan.
An industry source told Customs Today that the sales of the major tractor manufacturer may go above 65,000 units. He said that the tractor industry witnessed sales of just 35,000 units in last year 2013- 2014 (lowest recorded over the last seven-year period), down from highest ever 71,512 units sales in year 2010, adding that this GST reduction is expected to provide a significant boost to tractor sales.
On the other hand, as in July tractor sales go down because the farmers/growers were busy in sowing and growing the rice and cotton crops but the sales are expected to go up in the coming months and dealers and exporters have already started placing orders with the manufacturers.
Earlier, GST hike from January 2014 had pressed the assemblers to limit working in single shift followed by production suspension by two major manufacturers, resulting in workers’ dismissal.