[Back]   [Comments]  [Print]


Mahamad Rodzi Abdul Ghani




Mahamad Rodzi Abdul Ghani


Business Recorder -



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

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

Pakistan is spending about $ 300 million on the import of oilseeds. Thislow tariff structure is responsible for the lack of incentive to localfarmers to grow oilseeds.

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

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 oilcontents.

This means that about 300,000 tonnes oil from imported oilseed has nosales tax and has only 10 percent import duty.

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

This means that not only there is a great discrimination between thetariff structure of oilseeds and edible oil, but also the Government isdeprived 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 ofoilseeds as it does not want to encourage import; rather it is encouraginglocal 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 paidproperly. The Oil Seed Board in Pakistan has so far not done anyremarkable progress in this regard.

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

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