Some media reports are portraying that Urea manufacturers are asking Government to increase GST from 2% to 10%. This will virtually increase Urea fertilizer price by Rs. 135 per bag and DAP fertilizer by Rs. 520 per bag.
The comments are misconception and are concocted propaganda aired to malign the Fertilizer Industry before the budget which is providing “The Cheaper Fertilizer in Pakistan” as compared to the rest of the world. Just to clear the haze, it is highlighted that there is proportionate difference between input GST and output GST. Government is deducting input GST from the industry in advance to generate timely revenue which is more in ratio than the output GST. To compensate the over payment, Fertilizer Industries are asked to claim refund from the FBR. However, due to faulty processing, it could not work. Resultantly, accumulated refundable amount started causing shortage of working capital for the Fertilizer Industry. In order to address this situation, Fertilizer Industry therefore, proposed to the Government to reduce the input GST rates proportionate to the output GST so that they should not resort to refunding. This would neither reduce the Government revenue nor would impact or increase the Fertilizer prices. Rather it will only address the refund problems being faced by the manufacturers.
Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC)