About 20 percent GST may be imposed on oilseeds import

KARACHI (May 03 2003) : About 20 percent general sales tax (GST) is likely to be imposed by the Federal Government on the import of oilseeds in the coming budget, it is learnt.

At present, the import of oilseeds attracts 10 percent duty only. The reason for imposition of 20 percent GST, according to sources, is that the quantum of imported of oilseeds had gone up from 200,000 tonnes to 800,000 tonnes in 2002.

Pakistan is spending about $ 300 million on the import of oilseeds. This low tariff structure is responsible for the lack of incentive to local farmers to grow oilseeds.

The vegetable ghee industry, which imports about one million tonnes edible oil are very much against the low tariff structure given to the oilseed industry.

Further, since oilseed import does not fall in the category of sales tax, the entire purpose of documenting the oil transactions has proved futile.

The imports of rapeseed and sunflower seed generate 42 percent oil contents.

This means that about 300,000 tonnes oil from imported oilseed has no sales tax and has only 10 percent import duty.

On the other hand, the importer of edible oil has to pay Rs 9,100 per tonne duty plus 20 percent sales tax on RBD palm olien and soya oil.

This means that not only there is a great discrimination between the tariff structure of oilseeds and edible oil, but also the Government is deprived of big revenue by imposing only 10 percent duty on oilseeds.

This anomaly needs to be corrected in the coming budget.

Market sources said that India has imposed 35 percent duty on import of oilseeds as it does not want to encourage import; rather it is encouraging local farmers to grow more seeds.

In Pakistan, the soil and weather are ideal to grow sunflower seed. However, the Government has not given priority to this sector.

For Government, in the agriculture sector, priority is given to wheat, cotton, rice and sugarcane.

However, to increase the production of oilseeds, farmers are not paid properly. The Oil Seed Board in Pakistan has so far not done any remarkable progress in this regard.

Sources in Ghee industry believe that either the Government should impose general sales tax on import of oilseeds and local sale of oil extracted from the oilseed as in the case of edible oil import and local sale or the Government exempt the import of edible oil also from the sales tax net.

This is very important to give level playing filed to both sectors.

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