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.
The aforementioned Act disallows adjustment of up to 10% 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.
All Pakistan Fertiliser Dealers Association (APFDA) had served notices to the fertiliser companies expressing their inability to register with the FBR and asked to continue business under the prevalent tax regime.
FMPAC Executive Director Brig (Retd) Sher Shah Malik said the FBR had recommended granting exemption to any sector where considered appropriate. Various sectors approached the board for the matter, but the board itself could not make any amendments without the orders of Finance Adviser Abdul Hafeez Sheikh.
According to the 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.
Shah also said 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 fertilizer manufacturing and import, as the majority of the fertilizer dealers are not registered and refused to get them registered as well.