The federal government has increased sales tax on tractors from 10 to 14 percent from October 23. The FBR issued a notification (SRO.1643) here on Wednesday.

In the last budget (2024-25), a sales tax exemption was withdrawn on tractors, and a 10 percent sales tax was imposed.

The Federal Board of Revenue (FBR) has completed working on a proposal to increase sales tax on tractors from 10 percent to 14 percent.

Sources informed that the rationale behind increasing the sales tax to 14 percent is that 10 percent of their input is not fully consumed. On the other hand, the standard rate of sales tax is 18 percent. Resultantly, the refund is generated for the tractors industry. To check the phenomenon of refunds within the tractor industry, the proposal is under consideration to raise sales tax on tractors.

Through the Finance Act 2024, the government has imposed 10 percent sales tax on tractors from July 1, 2024.

Earlier, the government had exempted tractors from sales tax.