Millat Tractors Limited (MTL), one of Pakistan’s leading tractor manufacturers, has announced the resumption of production operations starting from Wednesday, September 4, 2024. However, the company has clarified that sales will remain restricted until there is greater clarity regarding the Sales Tax refund procedure.

The Decision

The decision comes after a suspension of production on August 22, 2024, due to unresolved issues related to Goods and Services Tax (GST) refunds. MTL highlighted that while the GST on tractors is set at 10%, the GST on input raw materials is 18%. This discrepancy has resulted in a continuous accumulation of refund claims.

The company informed the Pakistan Stock Exchange (PSX) about the development on Tuesday, in compliance with relevant regulations.

“The Company will be resuming production from September 04, 2024 onwards. Sales shall continue to be restricted until clarification on Sales Tax refund procedure and applicability is provided by FBR,” read Millat’s notice to the PSX.

The resumption of production at MTL is expected to bring some relief to the tractor industry and its associated sectors. However, the continued restriction on sales remains a concern for both the company and its customers.

Moreover, it is crucial for the Federal Board of Revenue (FBR) to provide timely clarification on the Sales Tax refund procedure to enable smooth operations and boost sales in the tractor market.

A Milestone

Earlier this June, the company reported that it is all set to export about 3000 tractors in FY24 to countries like Africa, Afghanistan, South America, and the Middle East. The tractor industry stands out as a success story in terms of localization.

Meanwhile, Changan Pakistan is also a market player. In October 2023, Changan Pakistan exported a batch of 14 Oshan X7s to Kenyan and Tanzanian markets, making Changan Pakistan the country’s largest exporter of technologically advanced SUVs in international markets.

What do you think b about the update reported by the Millat Tractors? Drop your thoughts in the comments section.