ISLAMABAD – The Federal Board of Revenue (FBR) has abolished the sales tax exemption on tractors to meet the conditions laid forth by the the International Monetary Fund (IMF) for the loan deal.
Reports said a 4 percent increase in sales tax on tractors has been enforced, with the FBR issuing a notification in this regard. The notification stated that the sales tax on locally-manufactured tractors has been raised from 10% to 14%, and the same increase applies to imported tractors.
The price of tractor is expected to go up by Rs80,000 following the withdrawal of the exemption of 4% sales tax on it.
Last month, IMF approved a $7 billion new bailout package after Pakistan resolved to overhaul its agriculture income tax, transfer some fiscal responsibilities to provinces and agreed to decrease subsidies.
The Prime Minister’s Office had said that the Executive Board of the IMF approved the 37-month Extended Fund Facility totalling $7 billion. It also authorised the immediate release of the first loan tranche of less than $1.1 billion.
Pakistan will pay around 5% interest rate on the IMF loan, according to the Ministry of Finance statement given to the Senate Standing Committee on Economic Affairs.
