FBR announces Rs1.5bln sales tax discount on tractors

KARACHI: The Federal Board of Revenue (FBR) on Monday announced Rs1.5 billion in sales tax discounts to tractor manufacturers to financially support farmers.

The FBR allowed subsidy adjustment of an amount Rs1.5 billion against the payment of sales tax on manufacturing of tractors under a statutory regulatory order (SRO 1248(I)/2020).

The adjustment of subsidy against payment of sales tax will remain applicable up till June 30 next year from September 28. The facility of adjustment has been allowed to three major manufacturers, including Millat Tractors, Al-Ghazi Tractor and Orient Tractors.

The government had announced a fiscal package of over Rs1.2 trillion in the wake of COVID-19 to provide financial assistance for the development of agriculture sector. Of the package, Rs50 billion was set aside for relief to the agriculture sector, and one-year sales tax subsidy of 5 percent to locally manufactured tractors was also announced.

The manufacturers have been asked to provide details of sales through monthly sales tax returns by the fifth day of the month following the end of the tax period. The adjustment of sales tax is subject to condition that the manufacturers would only sell the subsidised tractors to the farmers and growers after obtaining a valid proof of land holding such as agriculture pass book and copy of record of rights of agriculture land verified by provincial land revenue authorities and should not charge and collect amount of sales tax from such buyers.

The FBR said tractor manufacturers or dealers will be responsible to pass on benefit of subsidy to growers. “In this regard the manufacturers or dealers shall submit an undertaking with their claims that the tractors were sold to farmers and growers,” the FBR said in a statement.

Ministry of food security and research or FBR will have authority to check the authenticity of the claims of manufacturers or dealers through a random selection process.

The FBR said a cell will be established at the Inland Revenue department for dealing with the adjustment claim. The food ministry after examination of the adjustment claim will forward its report to the tractor subsidy cell of the FBR within seven working days of submission of required details for further proceedings to grant the facility, the FBR said. The revenue body said the government agencies will not be eligible for the subsidy. However, agriculture research institutes may avail this facility, it added.