Federal Board of Revenue (FBR) has agreed to introduce deemed price mechanism for charging reduced rate of sales tax on the import and local production of Di-ammonium Phosphate (DAP) fertilizer in the country. Sources told Business Recorder here on Tuesday that the decision has been taken in the last meeting to discuss the mechanism for disbursement of subsidy for Di Ammonia Phosphate (DAP) at Ministry of Industries & Production.
Minister for National Food Security & Research and senior FBR officials were also present. It was agreed unanimously that initially, deemed price may be considered for generating subsidy into the price of fertilizer by reducing sales tax on DAP produced in the country as well as imported. Secondly, the amount of subsidy would be paid directly to the FBR to offset the sales tax reduction. Thirdly, long term mechanism may be evolved for disbursing the subsidy. Fourthly, provinces may be advised to start registration of farmers as soon as possible, as it is decided to provide targeted subsidy. Fifthly, the provinces would develop an enforcement mechanism to ensure that fertilizer is sold at reduced price. Sixthly, Ministry of National Food Security & Research shall hold a meeting with the Federal Board of Revenue to finalise an arrangement for reduction of sales tax and transfer of subsidy directly to the FBR. Seventhly, the FBR and the provinces shall formulate a plan to curb smuggling of fertilizer abroad. Eighth, the manufacturers shall put in place an iron-cost mechanism to punish delinquent dealers/agents /distributors. Ninthly, Steering Committees would be formed in the provinces to oversee implementation and enforcement. To ensure inclusive oversight, stakeholders should be a part of such Steering Committees. It was also decided that transparent mechanism must be devised so that the ultimate end-User ie farmer community, may benefit from the subsidy. Consultation with all stakeholders was, therefore, the foremost priority.
The Minister for National Food Security & Research informed that detailed meetings were held with all stakeholders and fertilizer industry during the last financial year and stated that the Minister for Finance Division has announced on the floor of the house that Rs 20 billion would be provided as subsidy for farmers for purchase of phosphatic fertilizer in 2015-16.