Govt Likely to Abolish Sales Tax on Locally Manufactured Tractors

The government is likely to abolish sales tax on locally manufactured tractors in the upcoming budget 2018-19.

Sources revealed that Ministry of National Food Security & Research also proposed to abolish subsidy regime for fertilizers replacing it with a reduction in duties and taxes related to other items for the agriculture sector. The ministry has proposed maximum relief in taxes for fertilizers. However, it is difficult for the government to take this decision of removing the subsidy mechanism for fertilizer sector at the twilight of its tenure.

Two years ago, on the eve of budget announcement for fiscal 2016-17, former Finance Minister Ishaq Dar had announced a reduction in sales tax rate on imported and locally-manufactured tractors from 10 percent to 5 percent while customs duty on agricultural machinery, including harvesters, planters and laser land levelers, was also abolished.

According to sources, Ministry of National Food Security & Research (MNFSR) has proposed to the FBR to withdraw the 5 percent sales tax on locally manufactured tractors in the upcoming budget 2018-19. The government is considering to abolish taxes on tractors and other agri machinery.


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Meanwhile, Special Assistant to Prime Minister on Revenue/Federal Minister Senator Haroon Akhtar Khan held a meeting with various stakeholders and associations working in the agriculture sector to discuss their proposals and recommendations for the upcoming budget.

Federal Minister for National Food Security & Research Sikandar Hayat Khan Bosan and a team of senior officers from his ministry also attended the meeting. Chairman FBR Tariq Mahmood Pasha and senior officers of FBR were also present.

Various proposals and recommendations were discussed for boosting the agriculture sector, as well as measures for facilitating the farmers and strengthening the domestic rural economy.

Haroon Akhtar Khan said that agriculture is the backbone of the national economy. Strengthening agriculture and its allied sectors has been a key priority of the government. “The government is keen to continue extending and improving various subsidies and incentives already given to the farmers and proposals and recommendations in this regard would be sincerely considered and examined to make them part of the upcoming budget,” he added.

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