recorder report

ISLAMABAD: The Punjab government has approached the Ministry of Finance for sales tax reduction from 17 percent to 5 percent on calcium ammonium nitrate (CAN) and ammonium sulphate fertilizers.

Sources told Business Recorder here on Wednesday that Punjab government has written a letter to the Ministry of Finance on the provision of equal subsidy on all NPK fertilizers for their balanced use.

According to details, the federal government in collaboration with provincial governments has graciously announced a subsidy package for different fertilizers to pass on the benefit of reduction in prices to the farmers. Urea and DAP prices have been reduced by Rs 390 and Rs 300 per bag respectively. An additional dividend of Rs 50 per bag was also expected from the DAP suppliers & manufacturer to ensure DAP fertilizer is available at the rate of Rs 2500 per bag only. However, despite the fact that difference in prices of local and imported DAP suppliers exists in the market but the notified farmers’ prices are above Rs 2500 per bag in almost all regions of Punjab and bags of all subsidized fertilizers are also not according to the agreed design. Therefore, corrective actions are highly solicited to keep the companies to stick to the terms and conditions and prices agreed in abovementioned reference.

Moreover, the consultative group of agriculture stakeholders constituted in Punjab met and analyzed the present subsidy program and proposed for equal treatment of all nitrogenous, phosphatic and potassic fertilizers like urea to be subsidized on the same proportion based on active content basis to improve the balanced use of fertilizers. However this may be adjusted from existing financial resources, ie, Rs 17.160 billion and companies are also requested to contribute their share in CAN & AS in the form of price reduction in the same proportion as reduced in case of urea, ie, Rs 50/bag.

It is to mention here that CAN & AS are important fertilizers for the cotton crop. Urea, CAN & AS have nitrogenous base and have 46%, 26% & 20% nitrogen contents respectively and extending the sales tax reduction facility to CAN & AS would enable the cotton growers to use these important fertilizers for their crops. Therefore, it is recommended that sales tax reduction from 17% to 5% may also be granted to CAN and ammonium sulphate fertilizer as urea.

Single Superphosphate (SSP) is an important fertilizer and was included in subsidy scheme last year under Prime Minister Kissan package. In this scheme subsidy on imported SSP was given and local SSP was ignored due to quality difference and this difference initiated litigation and case is still pending with the Supreme Court. Therefore Punjab Agriculture Department does not recommend subsidy on SSP until the Supreme Court delivers judgment, sources added.