ISLAMABAD, June 20: The government has held in abeyance the implementation of zero-rated supply of parts, components and sub-components to manufacturers of tractors. A Central Board of Revenue official told Dawn on Monday that the decision was taken following a demand from vendors who were manufacturing tractor parts.

The vendors were of the opinion that in case of zero-rated supply, they could not claim input tax adjustment of the tax paid on different inputs used in the manufacturing of parts.

As there was no output tax, the vendors could only claim refunds of input tax, which could again create financial crisis for the vendors.

The government in the budget 2005-06 announced the zero-rated supply of tractor parts, components and sub-components made by authorized vendors to manufacturers through a budgetary notification SRO531.

Accordingly, the official said the supply of tractor parts, components and sub-components to the manufacturers should be charged at a standard rate of 15 per cent sales tax.