Govt Increases Sales Tax on Tractors to 14%
The federal government has raised the sales tax on tractors from 10% to 14%, effective October 23.
The Federal Board of Revenue (FBR) issued a notification (SRO.1643) on Wednesday, detailing the changes.
In the last budget for 2024-25, the government withdrew the sales tax exemption on tractors and initially imposed a 10% sales tax.
According to sources, the decision to increase the sales tax to 14% stems from the observation that 10% of the input tax on tractors is not fully utilized. Additionally, since the standard sales tax rate is 18%, the tractor industry has been generating refunds. To mitigate this issue of refunds, the proposal to raise the sales tax was put forward.
Through the Finance Act of 2024, a 10% sales tax was imposed on tractors starting July 1, 2024. Previously, tractors had been exempt from sales tax.
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