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Revenue Board opposes GST exemption on phosphatic fertiliser

ISLAMABAD (October 31 2003): Despite the support of three ministries, the Central Board of Revenue (CBR) has strongly opposed the exemption of general sales tax (GST) on phosphatic fertiliser and its raw materials and asked the government to take other measures for reduction of prices of DAP fertiliser.

Sources in the Finance Division said that the ministries of commerce, petroleum and food and agriculture have supported the proposal of the Industries and Production Ministry for exemption of GST on phosphatic fertiliser, but the CBR has opposed the proposal and said that it was not possible.

The matter has been submitted to the Economic Co-ordination Committee (ECC) of the Cabinet, which will take it on Friday.

The Industries Ministry said that the production of phosphatic fertiliser in the country was 295,000 tonnes against the demand of 786,000 tonnes.

The cost of raw material was increasing, which would hit the prices of the fertiliser. The ministry said that earlier, the government had exempted the phosphatic fertiliser and its raw materials from the GST levy, but later, it was again imposed through an ordinance.

The ministry said that two of its units Lyallpur Chemicals and Hazara Phosphate were producing phosphatic fertiliser, but increase in the prices of raw materials would bring them into losses and it was feared that if the trend was not changed the Lyallpur Chemicals would face a loss of Rs 62 million and Hazara Phosphate would face a loss of Rs 92 million in the current fiscal, which might lead to closure of both the units.

The Fauji-Jordan had already suspended its operations owing to uneconomical plant.

The ministry has asked the ECC to exempt the phosphatic fertiliser and its raw materials from the GST to bring down the prices of fertiliser by Rs 20.

The decision of the ECC would encourage the growers and fulfill the commitment of the government to provide maximum relief to the growers for reduction of their cost of inputs, the sources added.

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