KARACHI: The business community has recommended the tax machinery that SRO 670(I)/2013 on sales tax on milk and milk based products which are subjected to zero rating should be retained to make products available to the consumer on affordable prices.
The business community said that the SRO will attract the documented segment of the economy for bringing more investments in dairy industry while also enhance transparency and attract the undocumented sector to start contribution in building up the national economy.
The following dairy products of (milk) are subjected to zero rating included: PCT headings 01.01, 0402.9900, 0403.1000, 0406.1010, 0405.1000, 04.01, 04.02, 0405.9000, 04.04, 0402.1000, 1901.1000 & 1901.9090 and any General Sales Tax (GST) input is admissible for refunds.
The decision was taken with considering of following rationales: to keep the milk and milk based products under the reach of all races; to promote milk and other value added dairy products at competitive pricing; to attract technologically advanced corporate for investment in the country to facilitate and support the entire dairy value chain for enhancing sector competitiveness; to provide safe milk consumption option to step in for a healthy population.
The business community said that Pakistan is the fifth largest milk producing country in the world, according to an estimate 47 billion liters of annual milk production from 72 million animals managed by approximately eight million farming households in the country.
It is highlighted that the industry is flourishing but also facing certain issues which hurdles its perspective growth. Mainly of the anomalous element is a parallel undocumented retail sector which represents 95 percent of the whole dairy industry.
It is witnessed that attention has never been diverted towards this undocumented sector to bring it under tax net to broaden the tax base.
The business community has also suggested that levy of 16 percent sales tax on agricultural pesticides should be reduced to five percent and only be levied at the import stage.
In current situation, the imposition of sales tax has given a steep rise in agriculture input cost which leads to an uneven playing field between the organized and the unorganized sector.