ISLAMABAD, May 4: The Pakistan Crop Protection Association (PCPA) has demanded of the government to withdraw 18 per cent general sales tax (GST) on pesticides or bring it at par with that on fertiliser to reduce costs of agricultural input.

Chaudhry Ejaz, chairman of the PCPA — a forum of around 70 importers, formulators and distributors of pesticides — told reporters on Sunday that 18 per cent GST had resulted in an increase of about 24 per cent in the prices of pesticides.

“Around Rs12 billion business of pesticides is taking place at the moment which is mostly import-oriented and GST collection amounts to around Rs1 billion per annum. A 15 per cent GST is applicable on pesticides import while another 3 per cent is charged at the retail stage because of value addition and other costs at the packing stage.”

He said the end result was that farmers could not perform in high crop-yield as input costs were high. He found it strange that fertiliser and pesticides had the same channel of production and sale but 15 per cent GST was applicable on fertilisers and 18 per cent on pesticides.

The higher price of pesticides was one of the reasons that per acre yield was more than 50 per cent lower than those in Egypt and Israel, he added.

Chaudhry Ejaz said with the introduction of generic scheme around 12 years ago, national companies had acquired around 83 per cent of pesticides business in Pakistan in terms of pesticide sale in litres.

In monetary terms, around 67 per cent business was with Pakistani companies while multinational companies had a market share of 17 per cent in terms of litres and 33 per cent in cash.

He said around 50,000 families were dependent upon the pesticides business besides the whole agricultural sector, particularly major crops.

He said if the government agreed to do away with 3 per cent sales tax at the retail stage, the industry would reduce prices by 10 per cent, which would help increase per acre yield.

If the government under the IMF conditions could not completely remove the GST on pesticides, as has been done on medicines, it should at least rationalize the tax by collecting it at source, he maintained.

He said that the minister’s committee on agriculture had also been apprised of the situation which had included these recommendations in the report that would be considered by the government to reduce input costs.