Fertiliser industry demands tax exemptions

Published November 26, 2020
Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) has asked the government to exempt the fertiliser industry from the income and sales tax laws introduced through Finance Act 2020. — Dawn/File
Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) has asked the government to exempt the fertiliser industry from the income and sales tax laws introduced through Finance Act 2020. — Dawn/File

KARACHI: Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) has asked the government to exempt the fertiliser industry from the income and sales tax laws introduced through Finance Act 2020 as the farmers would face the burden of this clause.

These laws disallowed adjustment of up to 10 per cent cost for income tax and input sales tax for the sales made to unregistered dealers beyond Rs10 million per month and Rs100 million per annum.

FMPAC Executive Director Brig (Retd) Sher Shah Malik said that fertiliser dealers have refused to get registered with the Federal Board of Revenue (FBR) despite repeated attempts.

“Not a single new dealer enrolled in the supply chain of the fertiliser manufacturers while existing dealers have also refused to work with the industry,” he said, adding the industry is not in a position to coerce the dealer to get registered under the Act.

All Pakistan Fertiliser Dealers Associ­ation (APFDA) had served notices to the fertiliser companies expressing their inability to register with the FBR and continue business under the prevalent tax regime.

Shah said the FBR had recommended for granting exemption to any sector where considered appropriate. Different sectors approached the board in this regard, but the board itself could not make any amendments without the orders of Finance Adviser Abdul Hafeez Sheikh.

He urged the adviser to direct FBR for granting a specific exemption to the fertiliser industry ab-initio from the provisions of section 73(4) of the Act and section 21(q) of the Ordinance.

As per amendments through Finance Act in section 21(q) of Income Tax Ordinance 2001 together with section 73(4) of the Sales Tax Act 1990, disallowed adjustment of a significant part of input GST and business expenditure against sales to unregistered persons.

The government made these amendments to document the economy and bring the taxable businesses into the tax net. However, these provisions causing a significant increase in the cost of fertiliser manufacturing and import, as the majority of the fertiliser dealers are not registered and refused to get them registered as well, he said.

Published in Dawn, November 26th, 2020

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