The federal government is planning to increase the sales tax on tractors from 10 to 14 percent.
In the 2024-25 budget, the sales tax exemption on tractors was removed, and a 10 percent tax was applied. The Federal Board of Revenue recently held a meeting about this and completed a proposal to raise the sales tax from 10 to 14 percent.
The tax increase will take effect after cabinet approval. The finance ministry has sent the summary to the Cabinet for review.
Authorities are of the view that 10 percent of the input is not fully consumed while the standard sales tax rate is 18 percent, leading to refunds in the tractor industry. To reduce these refunds, the government is considering this tax increase.
The Finance Act 2024 imposed a 10 percent sales tax on tractors starting July 1, 2024. Previously, tractors were exempt from sales tax.