PAAPAM urges PM to provide clarity on GST refunds

LAHORE: The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has urgently appealed to Prime Minister Shehbaz Sharif to address the recent imposition of a 10 per cent GST on tractors, which has led to a near halt in tractor sales due to confusion surrounding the government’s decision.

In a letter addressed to the prime minister, PAAPAM Chairperson Abdul Rehman Aziz highlighted that tractor and parts production and sales have been severely impacted since the new Finance Act took effect on July 1, 2024.

The confusion stems from the lack of a clear mechanism for GST refunds and a failure to distinguish between farmers -- who are to be charged 10 per cent GST -- and non-farmer buyers, who face an 18 per cent tax.

This uncertainty has nearly halted tractor sales, leading to a significant reduction in production and imminent closures for tractor parts manufacturers. The PAAPAM chairperson warned that if the situation is not addressed immediately, the industry may face severe financial strain, potentially resulting in mass layoffs. The letter also points out that multi-billion rupee GST refunds have been delayed by the Federal Board of Revenue (FBR), causing severe liquidity issues across the tractor manufacturing supply chain.PAAPAM requested the prime minister for intervention to resolve these issues. The letter expresses confidence that with the prime minister’s support, the industry can navigate these challenges and continue contributing to Pakistan's economy.