New tax laws Price of urea bag to increase by Rs90-120 from Jan 1

LAHORE: Fertiliser manufacturers have decided to pass the impact of the imposition of new tax laws on the industry by the government through Finance Act 2020 by increasing the price of a urea bag by Rs90 to Rs120 from January 1, 2021.

The fertiliser industry officials said that they repeatedly approached the federal government but it ignored concerns of industry, leaving it with no option other than increasing urea price. The amendments made by the government through the 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.

The officials said the laws had disallowed adjustment of up to 10pc cost for income tax and input sales tax for the sales made to unregistered dealers beyond Rs 10 million per month and Rs 100 million per annum. They said the penalties on the industry for the inability of the FBR to register dealers for sales tax have led to higher costs for the manufacturers.

A recent letter by the Fertiliser Manufactures Pakistan Advisory Council (FMPAC), the representatives body of the manufactures, to Minister for National Food Security and Research (MNFSR) Syed Fakhar Imam, said, “It may kindly be noted that lack of immediate resolution of the matter will further worsen an already volatile economic environment, leaving the industry with no other option but to pass on the burden of Rs 90 to 120 per bag of urea to the farmers”.

When called, Federal Minister for National Food Security and Research Syed Fakhar Imam did not respond, and instead asked the correspondent to text him the query. The question was texted, but he did not respond to it. The PIO was also contacted but he was also not available. His staff said the message would be conveyed to him.