LAHORE: The government decision to restrict claimability of input sales tax from unregistered consumers through the Tax Laws (Second Amendment) Ordinance 2019 can increase urea price by Rs40 per bag before end of the current month, sources in two seperate fertiliser manufacturing companies told Dawn.

The objective of this amendment through the Presidential Ordinance is to bring major distributors into the sales tax regime. Industry insider said that against the sales made to unregistered distributors who make purchases of Rs10 million on a monthly basis or Rs100m on annual basis, the manufacturers would not be granted input adjustments.

“To promote registration of maximum people for sales tax purpose, the government has now introduced this penal provision. Since majority of the fertiliser dealers being unregistered, this could lead to a Rs40 per bag increase in urea prices,” an industry representative shared while talking to Dawn on Thursday.

He said the distributors’ reluctance to get themselves registered under the tax net would eventually be passed on to the farmers.

Published in Dawn, January 3rd, 2020