ISLAMABAD: The government will give a subsidy of Rs1.5 billion on locally manufactured tractors for one year as part of the hscal package announced for the agriculture sector in the wake of Covid-19.

Details of the package for 2020-21 released by the Cabinet Division, the sales tax subsidy on locally manufactured tractors will be five per cent.

At present, 5pc sales tax is applied on each tractor.

Massey Ferguson and Al-Ghazi are the two main manufacturing units having market share of 60pc and 40pc, respectively.

Total annual sales of these two units during 2019 were 41,000 units and average sales tax around 60,000 per tractor.The Ministry of National Food Security and Research said on Saturday that out of the package of Rs1,200bn announced by the government after Covid-19, an amount of Rs50 billion has been earmarked for the agriculture sector.

The economic coordination committee in its recent meeting had approved the proposals submitted by the food ministry.

According to the implementation mechanism, the Federal Board of Revenue will notify GST subsidy, while the local tractor manufacturers will report to FBR and food security ministry their sales report on the fif th of every following month.

The ministry would ensure through forensic audit on quarterly basis to confirm proper utilisation of the subsidy for the benefit of farmers. Its area, jurisdiction and duration includes the entire country during 2020-21.