ISLAMABAD - Local tractor industry has urged the federal government not to impose Minimum Value Addition Sales Tax (MVA) as it will increase the input cost and will negatively impact the consumers. In a meeting, Executive Director and CFO of AI-Ghazi Tractors Limited (AGTL) Kashif Lawai informed the FBR that supply of agricultural tractor is charged to sales tax at the rate of 5 percent as against input tax payable on raw material at the rate of 17 percent, locally as well as imported, resulting in regular monthly sales tax refund claim. In this regard, the following clause has been inserted in sales tax Act through Finance Act 2019: “The sales tax on account of minimum value addition as payable under Twelfth Schedule (hereinafter referred to as value addition tax), shall be levied and collected at import stage from the importer on all taxable goods as are chargeable to tax under section 3 of the Act or any notification issued thereunder at the rate specified in the Table in addition to the tax chargeable under section 3 of the Act”. The Law further excludes as follows: The value addition tax under Twelfth Schedule shall not be charged on raw materials and intermediary goods meant for use in an industrial process which are subject to customs duty at a rate less than 16% ad valorem under First Schedule to the Customs Act, 1969. It is to be noted that AGTL imports raw material under various custom tariff i.e. 11% to 35%. However, for all practical purposes only 1% custom duty is charged at import stage under SRO-656(1)/2006 custom notification allowing EDB approved OEMs to import raw material at reduced rates of custom duty to assemble agricultural tractor.