KARACHI: Pakistan’s Fertiliser Manufacturers Advisory Council (FMPAC) asked the government to exclude the fertiliser sector from the revenue and sales tax laws enforced by the 2020 Finance Act as the brunt of this provision will be borne by farmers.
These laws prohibited the modification of income tax and input sales tax costs of up to 10 percent for sales rendered to unregistered dealers above Rs10 million a month and Rs100 million per annum.
FMPAC Executive Director Brig (Retd) Sher Shah Malik said that amid repeated attempts, fertiliser dealers had failed to get licenced with the Federal Board of Revenue (FBR).
Not a single new dealer is licenced in the fertiliser manufacturers’ supply chain, although current dealers have still failed to cooperate with the industry,” he said, adding that the industry is not in a position to force the dealer to register under the Act.”
The fertiliser firms were informed by the Pakistan Fertiliser Dealers Association (APFDA) of their failure to file with the FBR and to begin business under the new tax regime.
Shah said the FBR had proposed that every industry, if deemed necessary, be given an exception. Different industries approached the board in this respect, but without the instructions of Finance Advisor Abdul Hafeez Sheikh, the board itself did not make any amendments.
He advised the advisor to instruct the FBR to issue a particular exemption from the provisions of section 73(4) of the Act and section 21(q) of the Ordinance to the fertiliser industry ab-initio.
As amended by the Finance Act in Section 21(q) of the Income Tax Ordinance 2001 and Section 73(4) of the Sales Tax Act 1990, the modification of a considerable part of the input GST and company expense against sales to unregistered individuals was not authorised.
These reforms were made by the government to document the economy and put taxable undertakings into the tax net. These laws, however also induced a substantial rise in the cost of producing and importing fertiliser, as most fertiliser dealers are not registered and have even failed to register them, he stated.