ISLAMABAD: The federal government is planning to raise sales tax on tractors from 10 to 14 percent.
In the last budget (2024-25), a sales tax exemption was withdrawn on tractors, and a 10 percent sales tax was imposed.
Sources told Business Recorder that the Federal Board of Revenue has recently held a meeting in this regard. The Board has completed working on a proposal to increase sales tax on tractors from 10 percent to 14 percent.
Tractor industry faces crisis due to 10pc ST
The tax department will increase the tax after the approval of the Cabinet.
The finance ministry has forwarded the summary to the cabinet in this regard, source added. Sources further informed that the rationale behind increasing sales tax to 14 percent is that the 10 percent of their input is not fully consumed. On the other hand, the standard rate of sales tax is 18 percent. Resultantly, the refund is generated for the tractors industry. To check the phenomenon of refunds within the tractor’s industry, the proposal is under consideration to raise sales tax on tractors.
Through Finance Act 2024, the government has imposed 10 percent sales tax on tractors from July 1, 2024.
Earlier, the government had exempted tractors from sales tax.
Copyright Business Recorder, 2024
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