The government is likely to announce reduction in taxes and duties on the import of high tech agriculture machinery, equipment, and tractors in the next financial year.
An official source said that the government is also likely to reduce sales tax on locally manufactured agriculture equipment and tractors. All the incentives are being worked out keeping in mind the upcoming implementation of the Plants Breeders Rights Act (PBRA) that will allow enforcement of intellectual property rights in the country.
All the major international agriculture companies have already started their operations in the country. An investment of $500 million is likely to be made by the multinational companies in the first year after PBRA’s implementation.
“It will be a major activity and we want to provide incentives to lower cost of production and to make domestic commodities competitive in international markets,” the source said.
According to the budget proposals, the import of Euro two and three compliant tractors is likely to be made duty free. The taxes and duties of Belarusian tractors are likely to be reduced from 34 per cent to 20 per cent. The GST on locally manufactured tractors will be reduced further from 10 per cent to 7 per cent.
The duty on the import of poultry machinery is likely to be reduced to 2 per cent while GST will be limited to 7 per cent. The export of frozen and packed poultry is likely to be made zero rated while the 7 per cent sales tax on pesticides is likely to be completely abolished. These taxes contribute a few million rupees to the government coffers but cause billion of rupees worth of losses to the growers.
Promotion of trout and shrimp farming is another area where many tax incentives are likely to be announced in the next budget. Import of baby fish, trout and shrimp feed and other equipment used for their farming will be made duty free.
The other proposal being considered by the government for lowering cost of production is ending GST and GIDC on urea. Together they contribute Rs 73 billion per annum to the national exchequer. However, their elimination will help lower urea price from Rs 1850 to Rs 1150 per bag.