LAHORE - The tractor manufacturers have decided to raise price of the unit by more than 4 per cent, as the finance ministry has rejected a request by tractor makers to maintain GST on present ratio of 10 per cent, it was learnt.

The second time upward revision in almost five months period by Rs 20,000 to Rs 25,000 is being made partly on the excuse of unprecedented raise in costs of various inputs following reduction in local currency value in comparison with other major currencies and mainly to pressurize the new government to refrain from hiking sales tax on tractors to the standard level of 16 per cent.

Industry sources said that jump in price will be effective from June 21, 2013, after the announcement of federal budget scheduled to be declared on 14th of this month.

They said that tractor companies earlier increased the price of tractors by 5 per cent in the wake of the hike in rate of General Sales Tax (GST) in January this year.

According to them, in January, the companies had increased the price of MF-240 by Rs 30,500 from Rs 610,000 to Rs 640,000, and price of MF-260 was jumped to Rs703,000 from Rs670,000, showing an increase of Rs33,500 per tractor. In the same way, the price of MF 385 was hiked to Rs1,533,000 from Rs1,460,000 showing a jump of 73,000 per tractor.

The government had reduced GST on tractors to 5 percent, from 16 percent, bringing down tractor prices to about Rs100,000, But tractor manufacturers did not pass on the impact to farmers.

Sources said that Ministry of Finance has rejected the request of tractor makers to cut Sales Tax from existing 10 percent or maintain it on present level in the upcoming budget.

They observed that reduction of sales tax to 5 per cent put the tractor industry and its allied hundreds of vending units across the country back on track, bringing tractor rates in the reach of small land-holders - a step forward in farm mechanization, maximizing per acre yield.