ISLAMABAD, May 26: The government is considering a proposal to reduce general sales tax (GST) to 15 per cent from 20 per cent on import of palm oil and palm olein at the persistent demand of the vanaspati ghee manufacturers , well-placed sources told Dawn on Wednesday.

They said that a decision on the matter, expected to be announced in the upcoming budget, would resolve a major issue of withheld refunds between the country's 94 vanaspati manufacturers and the Central Board of Revenue.

The manufacturers demand more than Rs1 billion in refunds from the CBR, which in turn agree to pay only Rs350 million refunds. The row has resulted in a huge amount of withheld refunds after the GST was imposed on vegetable ghee and cooking oil as a conditionality of the IMF's Poverty Reduction and Growth Facility for Pakistan.

The tax authorities had collected Rs9 billion as GST on the import of RBD palm oil and RBD palm olein during the fiscal year 2002-03.