17% GST imposed on $3.7bn worth of plant & machinery imports

KARACHI: Through the mini-budget, the government has proposed implementation of 17% GST on 140 items which are essentially consumable and industrial goods.

“Amongst plant and machinery imports, our back of the envelope calculations suggest Rs659 billion ($3.7 billion) worth of such imports will be taxed for the next 6 months which is nearly 30% of annual machinery import bill for the current fiscal year,” an analyst at JS Global Capital said.

The proposal on a widespread increase in GST on sugar, poultry feed, oilseeds for poultry, imported vegetables, and other essential goods are directly going to impact inflation, albeit in a mild manner. On the other hand, the government has assured that these measures may not likely impact the masses but only the elite segment of population. This will likely enable the incumbent government to retain their political capital to a large extent.

The new tax measures on both consumable and industrial goods will also enable the government to help in reducing import bill, as some of the sales tax collection has been implemented on Sixth Schedule under which machinery imports were zero-rated, which also includes imported machines for mobile-phone manufacturing. This will impede imports growth ahead and should be taken as a welcoming sign to battle the widening current account deficit.

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