Millat Tractors Limited (MTL), a leading tractor manufacturer, has announced to stop production due to ongoing issues with Goods and Services Tax (GST) refunds.

The company disclosed this development in a formal notice to the Pakistan Stock Exchange, highlighting the financial strain caused by the disparity in GST rates.

According to the notification, the GST on tractors is set at 10%, while the GST on input raw materials is significantly higher at 18%. This discrepancy has led to a continuous accumulation of refund claims for the company.

Despite repeated requests for clarification and a mechanism for refund payments, the government has yet to provide a solution, said the company.

The lack of a refund mechanism has forced MTL to make the difficult decision to cease production until further notice. This move is expected to impact stakeholders across the supply chain, from suppliers to end consumers, and raises concerns about the broader implications for the agricultural sector.

Millat Tractors Limited has urged the relevant authorities to expedite the resolution of this issue to mitigate the financial impact on the company and its stakeholders.