LAHORE: The tractor manufacturing and parts industry is facing a serious crisis that threatens its stability and future. This sector, vital to our economy, exports goods worth $20 million, supports 200 vendors, and employs 200,000 people, with 95% of its components locally sourced.
The problem started when a 10% sales tax on tractors was introduced from June 2024, disrupting the industry. Previously, tractors were sales tax-free until June 2024, which helped manufacturers like Millat Tractors Limited (MTL) operate smoothly. Now, with the new tax, MTL is back in a refund process similar to the one set up after 2012, which efficiently handled refunds within three months.
In 2022, new rules (SRO 563 (1)/2022) made the refund process more complicated by setting conditions for buyers, limiting refunds to farmers with proper land documents. This has left many unable to get refunds, causing financial stress in the industry.
A group from the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), including Chairmen Abdul Rehman Aizaz, Senior Vice President Mumshad Ali, and others, visited the Millat Tractors Sheikhupura Plant to discuss these issues.
Aizaz and Ali emphasized the urgency, noting that since the budget announcement, the Federal Board of Revenue (FBR) has not clarified the sales tax refund process. As a result, MTL has stopped operations since July 1st, with no new orders or invoices, leading to significant financial losses compared to last year’s sales of 30,000 units.
